Toralf Mueller(German Passport No.: C4k5ch2nk) … PetitionerAnd1. Alcim Holding Sdn. Bhd.(Company No.: 655881-K)2. Alcim Sdn. Bhd.(Company No.: 746474-V)3. Jacob A/L George(Nric No.: 630624-10-6441)4. Rozilah Binti Mat Tahir(Nric No.: 730116-14-5776) … Respondents

  

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

 

PETITION NO: 26NCC-71-04/2012

 

In the matter of Section 181 of the Companies Act, 1965

 

And

 

In the matter of Order 88 of the Rules of the High Court 1980

 

And

 

In the matter of ALCIM HOLDING SDN. BHD. (Company No.: 655881-K)

 

And

 

In the matter of ALCIM SDN. BHD. (Company No.: 746474-V)

 

BETWEEN

 

TORALF MUELLER

 

(GERMAN PASSPORT NO.: C4K5CH2NK) … PETITIONER

 

AND

 

1. ALCIM HOLDING SDN. BHD.

 

(COMPANY NO.: 655881-K)

 

2. ALCIM SDN. BHD.

 

(COMPANY NO.: 746474-V)

 

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3. JACOB A/L GEORGE (NRIC No.: 630624-10-6441)

 

4. ROZILAH BINTI MAT TAHIR

 

(NRIC No.: 730116-14-5776) … RESPONDENTS

 

JUDGMENT

 

A. Introduction

 

1. This is a petition under s 181 of the Companies Act 1965 (CA) based on, among others, 2 trust deeds. I have refrained from using the term “oppression” for a suit under s 181 CA (Section 181 Action) as the scope of s 181 CA is wider than “oppression” (which will be elaborated later in this judgment). The distinctive feature of this case is that the factual position averred by the petitioner (Petitioner) is diametrically opposed to that taken by the respondents (Respondents).

 

2. The issues that arise for determination in this case are –

 

(a) whether findings of fact made by another High Court in an earlier suit (Conspiracy Suit) (the parties in the Conspiracy Suit include the parties in the Petition) after trial of the Conspiracy Suit, binds this court by reason of the second limb of res judicata doctrine (issue estoppel principle);

 

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(b) whether the Petitioner has the locus standi to file a Section 181 Action;

 

(c) whether the 2 trust deeds in this case are invalid for being contrary to public policy on the ground of the Petitioner’s circumvention of an alleged condition of a license issued by Petronas to the licensee company requiring minimum Bumiputera shareholding in the licensee company;

 

(d) whether the Respondents can admit as evidence in this case –

 

(i) communications between the Petitioner and the Petitioner’s learned counsel, Mr. Muralee Menon (Mr. Muralee);

 

(ii) communications between the Petitioner and Dato’ Stanley Isaacs (Dato’ Stanley), learned counsel for, among others, the Petitioner in the Conspiracy Suit;

 

(iii) negotiations between, among others, the third respondent (3rd Respondent) and Mr. Muralee in Mr. Muralee’s office on 6.9.2011; and

 

(iv) the report by a forensic information technology investigator, Encik Mohd. Shukri bin Othman (Encik Shukri) in respect of –

 

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(1) information extracted by Encik Shukri (Extracted Information) from “BlackBerry Bold 9700” mobile phone (BlackBerry) and “Delf’ laptop taken from the Petitioner (Laptop); and

 

(2) Encik Shukri’s analysis of the Extracted Information (Encik Shukri’s Report);

 

(e) whether the Petitioner is able to prove on a balance of probabilities the existence of circumstances alleged in this case within the meaning of s 181(1)(a) and/or (b) CA; and

 

(f) if the Petitioner is able to prove the existence of circumstances in s 181(1)(a) and/or (b) CA –

 

(i) is the Petitioner barred by his conduct from seeking for relief under s 181(2) CA?; and

 

(ii) if the Petitioner is not barred from applying for relief under s 181(2) CA, what is the appropriate relief to be granted under s 181(2) CA?

 

B. Parties

 

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3. The Petitioner is Mr. Toralf Mueller, a German citizen who resides in Kuala Lumpur.

 

4. The Respondents are as follows:

 

(a) the first respondent company (1st Respondent) is previously named as ALCIM Technology Sdn. Bhd. The 1st Respondent presently holds 51% shares in the second respondent company (2nd Respondent). As such, the 1st Respondent is now the holding company of the 2nd Respondent;

 

(b) the 2nd Respondent is formerly known as MYCIS Sdn. Bhd.;

 

(c) the 3rd Respondent is now –

 

(i) a shareholder of the 1st Respondent; and

 

(ii) a director of both the 1st and 2nd Respondents. In this judgment, the 1st and 2nd Respondents will be referred to as the “Companies”; and

 

(d) the fourth respondent (4th Respondent) is presently a shareholder and director of the Companies.

 

C. Background

 

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5. The Petitioner has a Master’s degree in Mechanical Engineering. The Petitioner worked as a “global integrated engineering” manager in –

 

(a) ALSTOM Power Switzerland from 1994 until 2002; and

 

(b) ALSTOM Power Asia Pacific Sdn. Bhd. (ALSTOM Asia Pacific) in Kuala Lumpur from 2002 to March 2004.

 

6. During the Petitioner’s stint in ALSTOM Asia Pacific, the Petitioner was introduced to the 3rd Respondent who was then the Project Manager for Turnkey Power Projects in ALSTOM Asia Pacific. The 3rd Respondent is a registered professional engineer with a Master’s degree in Civil Engineering.

 

C1. Incorporation of 1st Respondent

 

7. The Petitioner and 3rd Respondent worked together in ALSTOM Asia Pacific. The Petitioner and 3rd Respondent then decided to form a business together to manage the information of power plants using a software solution which was customized for this purpose.

 

8. The 3rd Respondent and his wife, Madam Susan Shireen Thomas (Madam Thomas) incorporated the 1st Respondent on 14.6.2004 whereby –

 

(a) the 3rd Respondent and Madam Thomas each subscribed one share in the 1st Respondent; and

 

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(b) the 3rd Respondent and Madam Thomas were the first directors of the

 

1st Respondent.

 

9. On 5.10.2004, Madam Thomas executed one “Form 32A” to transfer 1 share in the 1st Respondent to the Petitioner for RM1 (Form 32A dated 5.10.2004). The Petitioner was appointed a director of the 1st Respondent.

 

C2. Contract given by Malakoff Corporation Bhd’s (Malakoff) to 1st Respondent

 

10. The 3rd Respondent knew Malakoff’s management as the 3rd Respondent had worked with Malakoff’s management when the 3rd Respondent was with ALSTOM Asia Pacific.

 

11. Malakoff gave a contract, “Life Cycle Asset Information Management’, to the 1st Respondent in respect of Malakoff’s power generation plant at Tanjung Bin, Johore (Malakoff Contract).

 

C3. Joint venture between Petitioner, 3rd Respondent and Innotec GmbH (Innotec)

 

12. For Malakoff Contract, the 1st Respondent used a software system from a German company, Innotec.

 

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13. Innotec, the Petitioner and 3rd Respondent then formed a joint venture company named Innotec Asia Pacific Sdn. Bhd. (Innotec Asia Pacific). Innotec Asia Pacific was incorporated sometime in March 2005 whereby –

 

(a) Innotec held 50% shares in Innotec Asia Pacific; and

 

(b) the Petitioner and 3rd Respondent owned the balance 50% shares in Innotec Asia Pacific in equal shareholding.

 

14. Innotec Asia Pacific is now known as Jacob and Toralf Consulting Sdn. Bhd. (Jacob & Toralf Consulting).

 

C4. Contracts from Petronas and dispute with Innotec

 

15. The 1st Respondent managed to secure contracts from Petronas. Seeing the potential of doing business with Petronas, Innotec attempted to deal directly with Petronas. Hence, there arose a dispute between Jacob & Toralf Consulting and Innotec which resulted in a civil suit filed by the former against the latter in Kuala Lumpur High Court Civil Suit No. D5-24-268-06 (2006 Suit).

 

16. Jacob & Toralf Consulting and Innotec then entered into a settlement agreement with respect to the 2006 Suit (Settlement Agreement).

 

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17. After the execution of the Settlement Agreement, it was alleged that, among others, there was misrepresentation regarding the Settlement Agreement. Consequently, a civil suit, Kuala Lumpur High Court Civil Suit No. S22-129-2009 (2009 Suit), was filed by, among others, Jacob & Toralf Consulting, Petitioner, 1st and 3rd Respondents against, among others, Innotec. The 2009 Suit is still pending.

 

C5. Incorporation of 2nd Respondent

 

18. There is a conflict of evidence between the Petitioners and the Respondents regarding the formation and beneficial shareholding of the 2nd Respondent. At this juncture, I will only refer to the following documentary evidence concerning the 2nd Respondent:

 

(a) the 2nd Respondent was incorporated on 7.9.2006. The 2 subscribers and first directors of the 2nd Respondent were the 4th Respondent and Cik Florenda Binti Rubbin (Cik Florenda);

 

(b) the 4th Respondent and Cik Florenda, each owned 50,000 shares in the 2nd Respondent; and

 

(c) on 20.1.2008, Cik Florenda executed two Forms 32A to transfer –

 

(i) 49,000 share in the 2nd Respondent to the 1st Respondent for

 

RM49,000; and

 

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(ii) 1,000 share in the 2nd Respondent to the 4th Respondent for RM1.

 

C6. Restructuring of Companies

 

19. In view of the conflict between the evidence of the Petitioner and Respondents regarding the restructuring of the Companies, I will only refer at this juncture to the following documentary evidence concerning the 1st Respondent –

 

(a) a trust deed was executed on 16.12.2009 by the Petitioner, 3rd and 4th Respondents [1st Trust Deed (1st Respondent)]. The 1st Trust Deed (1st Respondent) was signed by the Petitioner, 3rd and 4th Respondents in the presence of Mr. Thomas George, the 3rd Respondent’s brother;

 

(b) the 1st Trust Deed (1st Respondent) provided, among others, as follows –

 

(i) the 4th Respondent holds 105,000 shares in the 1st Respondent [4th Respondent’s Registered Shares (in 1st Respondent)] and

 

“all dividends and interests accrued or to accrue” in respect of the 4th Respondent’s Registered Shares (in 1st Respondent) in trust for the Petitioner and 3rd Respondent; and

 

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(ii) the 4th Respondent “shall attend all meetings of directors and shareholders and will vote at such meeting in such manner’ as the Petitioner and 3rd Respondent have directed jointly in writing prior to the meeting of the 1st Respondent;

 

(c) on 29.1.2010 –

 

(i) the Petitioner executed one Form 32A to transfer 50,000 shares in the 1st Respondent owned by the Petitioner, to the 4th Respondent; and

 

(ii) the 3rd Respondent signed one Form 32A to transfer the 3rd Respondent’s 55,000 shares in the 1st Respondent to the 4th Respondent

 

(2 Forms 32A dated 29.1.2010); and

 

(d) the 4th Respondent signed the following undated documents –

 

(i) a resolution of the 1st Respondent’s directors for the transfer of 4th Respondent’s Registered Shares (in 1st Respondent) to the Petitioner and 3rd Respondent;

 

(ii) two Forms 32A to transfer 4th Respondent’s Registered Shares (in 1st Respondent) to the Petitioner and 3rd Respondent;

 

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(iii) a directors’ circular resolution (DCR) of the 1st Respondent to appoint new directors for the 1st Respondent (there was no name of the new director); and

 

(iv) the 4th Respondent’s letter to the 1st Respondent regarding the 4th Respondent’s resignation as a director of the 1st Respondent

 

[Security Documents (1st Respondent)].

 

20. The shareholding of the 1st Respondent before and after its restructuring is as follows:

 

No. of shares held before restructuring No. of shares held after restructuring on 29.1.2010

 

Petitioner 122,500 72,500

 

3rd Respondent 127,500 72,500

 

4th Respondent  105,000

 

Total shares in 1st Respondent 250,000 250,000

 

21. In respect of the 2nd Respondent –

 

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(a) a trust deed was executed on 16.12.2009 by the Petitioner, 3rd and 4th Respondents [2nd Trust Deed (2nd Respondent)]. The 2nd Trust Deed (2nd Respondent) was signed by the Petitioner, 3rd and 4th Respondents in the presence of Mr. Thomas George;

 

(b) the 2nd Trust Deed (2nd Respondent) contains similar provisions as the 1st Trust Deed (1st Respondent) and provides, among others, that the 4th Respondent holds 122,500 shares in the 2nd Respondent [4th Respondent’s Registered Shares (in 2nd Respondent)] and “all dividends and interests accrued or to accrue” in respect of the 4th Respondent’s Registered Shares (in 2nd Respondent) in trust for the Petitioner and 3rd Respondent;

 

(c) on 22.12.2009, the 4th Respondent executed one Form 32A to transfer 52,500 shares in the 2nd Respondent held by the 4th Respondent, to the 1st Respondent (Form 32A dated 22.12.2009); and

 

(d) the 4th Respondent signed the following undated documents –

 

(i) the 2nd Respondent’s DCR for the transfer of the 4th Respondent’s Registered Shares (in 2nd Respondent) to the Petitioner and 3rd Respondent;

 

(ii) the 2nd Respondent’s DCR authorizing the Petitioner and 3rd Respondent to “cancel off the current signatories” of the 2nd

 

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Respondent’s bank account at the branch of CIMB Bank Bhd (CIMB) at Menara Choy Fook On, Petaling Jaya, and to replace the current bank account signatories with the Petitioner and 3rd Respondent (Resolution for Change of 2nd Respondent’s Bank Account Signatories);

 

(iii) one Form 32A to transfer 4th Respondent’s Registered Shares (in 2nd Respondent) to the 3rd Respondent;

 

(iv) the 2nd Respondent’s DCR to appoint new directors for the 2nd Respondent (there were no names of the new directors); and

 

(v) undated letters to the 2nd Respondent by the 4th Respondent, Cik Nurul Aimi bt. Ghazali (Cik Nurul) and Cik Mardina bt. Ismail (Cik Mardina) regarding their resignation as directors of the 2nd Respondent

 

[Security Documents (2nd Respondent)].

 

22. After the restructuring of the 2nd Respondent –

 

(a) the 1st Respondent is the holding company of the 2nd Respondent with 51% of the shares in the 2nd Respondent; and

 

(b) the 4th Respondent holds 49% shares in the 2nd Respondent.

 

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C7. Management of Companies

 

23. In view of the conflict in evidence between the Petitioner and Respondents, suffice it to state at this juncture the following positions held in the Companies:

 

(a) the Petitioner was a director of the 1st Respondent until 29.11.2011;

 

(b) until 3.2.2012, the Petitioner was a director of the 2nd Respondent;

 

(c) the Petitioner was the 2nd Respondent’s Chief Executive Officer (CEO) until his removal on 14.10.2011; and

 

(d) the 3rd and 4th Respondents are still directors of the Companies.

 

D. Conspiracy Suit

 

24. The Companies filed the Conspiracy Suit in Kuala Lumpur High Court NCC No. 4 (NCC 4 Court) against the following parties:

 

(a) the Petitioner;

 

(b) Mr. Jayanth John a/l TJ John (Mr. Jayanth), the Chief Operations Officer (COO) of the 2nd Respondent until 14.10.2011;

 

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(c) Cik Harynah Samat (Cik Harynah), the 2nd Respondent’s Finance and Accounts manager until 14.10.2011;

 

(d) Ms. Sharon Ooi Jen Mei (Ms. Ooi), the “Supply Chain” manager of the 2nd Respondent until 14.10.2011;

 

(e) Encik Mohd. Syahmi Yazid bin Yaakop (Encik Syahmi), the 2nd Respondent’s Project Manager until 14.10.2011;

 

(f) Ms. Sunitha Sharmila a/p Rajendra Parshad (Ms. Sunitha), the “Information Technology/Information Systems” manager in the 2nd Respondent until 14.10.2011;

 

(g) Mr. Chan Zhi Weng (Mr. Chan), the 2nd Respondent’s “Business Process” manager until Mr. Chan’s resignation on 3.10.2011;

 

(h) Mr. Muralee, the Petitioner’s lawyer who is a partner in the firm, Messrs “Jaafar & Menon” (Messrs JM); and

 

(i) Puan Rubiah Jaafar, Mr. Muralee’s wife and partner in Messrs JM (Puan Rubiah).

 

25. In the Conspiracy Suit, the Companies alleged, among others, the

 

following:

 

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(a) the Petitioner and Mr. Jayanth had breached their fiduciary duties owed to the Companies;

 

(b) Cik Harynah, Ms. Ooi, Encik Syahmi, Ms. Sunitha and Mr. Chan had breached their duties owed to the 2nd Respondent as employees of the 2nd Respondent; and

 

(c) the Petitioner, Mr. Jayanth, Cik Harynah, Ms. Ooi, Encik Syahmi, Ms. Sunitha, Mr. Chan, Mr. Muralee and Puan Rubiah (Alleged Conspirators) or any 2 of the Alleged Conspirators, conspired to injure and to cause loss to the Companies.

 

26. In the Conspiracy Suit –

 

(a) the Petitioner counterclaimed against the Companies, 3rd and 4th Respondents (Petitioner’s Counterclaim); and

 

(b) Mr. Muralee, Puan Rubiah and Messrs JM counterclaimed against the 2nd Respondent for the payment of RM50,000 as legal fees (Messrs JM’s Counterclaim).

 

27. In the Conspiracy Suit [2015] AMEJ 417, Hasnah Mohammed Hashim J in

 

NCC 4 Court has decided as follows, among others:

 

(a) on 26.4.2013, all correspondence between the Petitioner and Mr. Muralee was held to be legally privileged communication and was

 

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excluded as evidence in the Conspiracy Suit (Court’s Ruling dated 26.4.2013). The Court’s Ruling dated 26.4.2013 was made pursuant to s 126(1) of the Evidence Act 1950 (EA); and

 

(b) after a lengthy trial, among others –

 

(i) the Conspiracy Suit was dismissed;

 

(ii) the Petitioner’s Counterclaim was allowed; and

 

(iii) Messrs JM’s Counterclaim was allowed.

 

28. NCC 4 Court has made certain findings in the Conspiracy Suit (Findings in Conspiracy Suit). I will discuss later in this judgment whether this court is bound by the Findings in Conspiracy Suit by reason of issue estoppel doctrine.

 

E. Proceedings in this case

 

29. After the filing of the Conspiracy Suit, on 26.4.2012, this petition was filed. The Petitioner subsequently applied in court enclosure no. 8 to transfer this case to NCC 4 Court and to consolidate this case with the Conspiracy Suit (Court Enc. 8).

 

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30. On 23.6.2013, all parties in this case agreed for the Conspiracy Suit to be disposed first before this case. Hence, Court Enc. 8 was not proceeded with and the hearing of this petition was stayed pending the disposal of the Conspiracy Suit. All parties in this petition further agree for the crossexamination of the Petitioner and 3rd Respondent by the respective opposing counsel.

 

31. The Conspiracy Suit was decided by NCC 4 Court on 4.2.2015. Thereafter, this petition continued with the cross-examination of the Petitioner and 3rd Respondent by the respective opposing counsel.

 

32. It is agreed by all parties that to expedite the disposal of this case, learned counsel need not put or suggest all disputed matters during crossexamination and such an omission does not mean that a party has accepted contrary averments in the opposing party’s affidavit. This course of action is allowed in the Federal Court’s judgment in Wong Swee Chin v Public Prosecutor [1981] 1 MLJ 212, at 213.

 

F. Petitioner’s case

 

33. The Petitioner alleged, among others, as follows:

 

F1. Agreement or understanding between Petitioner and 3rd Respondent

 

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(1) there was an agreement or understanding between the Petitioner and 3rd Respondent that so long as both the Petitioner and 3rd Respondent were shareholders in the 1st Respondent –

 

(a) both the Petitioner and 3rd Respondent shall be directors in the Companies and both of them shall be entitled to participate equally in the management of the Companies;

 

(b) both the Petitioner and 3rd Respondent are the de facto owners of the Companies;

 

(c) both the Petitioner and 3rd Respondent shall have the same powers and benefit 87 in the Companies which are not limited to voting rights, salaries, bonus and dividend. It was subsequently agreed by the Petitioner and 3rd Respondent that the Petitioner would manage the 2nd Respondent while the 3rd Respondent would concentrate on the 2009 Suit;

 

(d) by reason of the 2 Trust Deeds, the 4th Respondent holds shares in the Companies in trust for both the Petitioner and 3rd Respondent in equal shares;

 

(e) as a trustee for both the Petitioner and 3rd Respondent, the 4th Respondent shall only have the right to vote as instructed jointly in writing by both the Petitioner and 3rd Respondent;

 

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(f) if there is a need to claim back shares in the Companies from the 4th Respondent, the 2 Trust Deeds and Security Documents will “secure” the position of both the Petitioner and 3rd Respondent as the de facto owners of the Companies; and

 

(g) the brother of the Petitioner (Mr. Thomas Mueller) and the 3rd Respondent’s brother (Mr. Thomas George) shall not join or hold any position in the Companies;

 

F2. Petitioner’s 10 grievances (10 Grievances)

 

(2) 10 Grievances were averred by the Petitioner to constitute –

 

(a) oppression of the Petitioner;

 

(b) disregard of the Petitioner’s interest;

 

(c) discrimination of the Petitioner; and/or

 

(d) prejudice to the Petitioner; and

 

(3) the 10 Grievances are as follows –

 

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(a) the working relationship between the Petitioner and 3rd Respondent was initially good but deteriorated sometime in early 2011 until 20.6.2011 when the 3rd Respondent called for a meeting at Cyberjaya and threatened to wind up the Companies (1st Grievance);

 

(b) the second complaint by the Petitioner was that despite the Petitioner’s numerous requests, the 3rd and 4th Respondents refused to stop payment of RM672,000 by the 2nd Respondent to 1st Respondent for “Technical Advisory Services” which had not been provided by 1st Respondent to the 2nd Respondent (2nd Grievance);

 

(c) the third grievance was that the 3rd and 4th Respondents took steps to oust the Petitioner from the management of the Companies by having a “hostile takeover’ of the Companies (3rd Grievance);

 

(d) the 3rd and 4th Respondents caused the Companies to appoint new directors without the Petitioner’s knowledge and approval (4th Grievance);

 

(e) the Petitioner alleged that he was wrongly removed as –

 

(i) the 2nd Respondent’s CEO;

 

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(ii) a director of the 1st Respondent at the 1st Respondent’s extraordinary general meeting of shareholders (EGM) on 29.11.2011; and

 

(iii) the 2nd Respondent’s director at the EGM of the 2nd Respondent’s shareholders on 3.2.2012

 

(5th Grievance);

 

(f) on or about 17.10.2011, the Petitioner was removed as an authorised cheque signatory of the 2nd Respondent’s bank accounts in Standard Chartered Bank (SCB), Hong Leong Bank Bhd. (HLB) and CIMB without the Petitioner’s approval (6th Grievance);

 

(g) the Petitioner complained that there had been a dissipation of the Companies’ funds by the 3rd and 4th Respondents (7th Grievance);

 

(h) the eighth complaint was the refusal of the 3rd and 4th Respondents to recognise the validity of the 2 Trust Deeds and Security Documents (8th Grievance);

 

(i) the 3rd and 4th Respondents had caused a dilution of the Petitioner’s shares in the 1st Respondent in the 1st Respondent’s EGM on 29.11.2011 (9th Grievance); and

 

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(j) the last complaint was that the 4th Respondents had breached the 2 Trust Deeds (10th Grievance).

 

G. Respondents’ case

 

34. The Respondents’ affidavits have not only denied the 10 Grievances but have alleged, among others, the following:

 

G1. Formation of 1st Respondent

 

(1) the 3rd Respondent and his wife incorporated the 1st Respondent. The 3rd Respondent paid for the cost of the 1st Respondent’s incorporation. The 1st Respondent’s working capital was paid by –

 

(a) the 3rd Respondent; and

 

(b) later by revenue derived from contracts obtained by the 1st Respondent;

 

(2) the Petitioner did not provide any money for the 1st Respondent’s incorporation and working capital. The Petitioner only became the 1st Respondent’s shareholder after the 3rd Respondent had procured Malakoff Contract for the 1st Respondent. The Petitioner’s initial shares in the 1st Respondent were paid for by the 3rd Respondent;

 

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G2.

 

Incorporation of 2nd Respondent

 

(3) Petronas could only give a contract to a company with a minimum of 51% Bumiputera shareholding. The 3rd Respondent spoke to the 4th Respondent who agreed to be a shareholder of the 2nd Respondent together with Cik Florenda. Subsequently, Cik Florenda transferred her shares in the 2nd Respondent to the 1st and 4th Respondents;

 

(4) the 3rd Respondent paid for the cost of incorporating the 2nd Respondent. The working capital of the 2nd Respondent was paid by the 3rd Respondent and from money derived from contracts obtained by the 2nd Respondent. The Petitioner did not fund the incorporation and working capital of the 2nd Respondent;

 

G3. 2 Trust Deeds and Security Documents

 

(5) the 2nd Respondent obtained a Petronas license in September 2007 and proceeded to obtain contracts from Petronas. Sometime in 2009, the Petitioner expressed his concern over the fact that the 4th Respondent held 51% shares in the 2nd Respondent and the 2nd Respondent had started to secure major contracts from Petronas. The Petitioner represented to the 3rd and 4th Respondents that if “something” happened to the 4th Respondent, the Petitioner wished to ensure both the Petitioner and 3rd Respondent would control the Companies. The 3rd Respondent informed the Petitioner that this was possible but the Petitioner and 3rd Respondent had to “compensate” the 4th Respondent by providing shares in the 1st Respondent to the 4th

 

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Respondent. This would also satisfy Petronas’ licensing requirement regarding minimum Bumiputera shareholding;

 

(6) the Petitioner requested the 4th Respondent to sign the 2 Trust Deeds and Security Documents to provide “comfort to the Petitioner in the event that anything should happen to the 4th Respondent –

 

(a) the 4th Respondent’s shares in the Companies would “revert to the Petitioner and 3rd Respondent; and

 

(b) the Petitioner and 3rd Respondent would pay the 4th Respondent “the amount reflected in the share transfer forms” as consideration for the 4th Respondent’s shares in the Companies;

 

(7) it was understood by all parties that the 4th Respondent had fiduciary duties as a director of the Companies to act in the best interest of the Companies and the 2 Trust Deeds could not be used to “pressurise” the 4th Respondent to breach her fiduciary duties owed to the Companies;

 

(8) there was no agreement that Mr. Thomas Mueller (the Petitioner’s brother) and Mr. Thomas George (the 3rd Respondent’s brother) would not involve themselves or hold any position in the Companies. In fact, Mr. Thomas George had assisted the Companies by providing his business office and

 

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staff for the use of the Companies until the Companies had sufficient funds to have their own offices and employees;

 

G4. Change in management of Companies

 

(9) in 2009, the Petitioner requested to helm the 2nd Respondent as its CEO. As the 2009 Suit was of great importance to the 1st Respondent and since the 2009 Suit needed a lot of attention, the 3rd Respondent agreed with the Petitioner in January 2010 as follows –

 

(a) the Petitioner would be the 2nd Respondent’s CEO and would be responsible for the 2nd Respondent’s day-to-day management. The Petitioner would report on the 2nd Respondent’s development to the 1st Respondent’s board of directors (BOD). The 3rd Respondent remained as a director of the 2nd Respondent; and

 

(b) the 3rd Respondent would concentrate on the 2009 Suit;

 

G5. Petitioner’s “Grand Plan”

 

(10) the 2nd Respondent did not secure any major contract throughout 2010. By January 2011, the 3rd Respondent was putting pressure on the Petitioner and Mr. Jayanth to secure new contracts for the 2nd Respondent as the major Petronas contracts given to the 2nd Respondent (which had been secured by the 3rd Respondent

 

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during the 3rd Respondent’s tenure in the 2nd Respondent’s management) were drawing to a close;

 

(11) in March 2011, the Petitioner and Mr. Jayanth went to Dubai purportedly to look for business opportunities for the Companies. Between March and May 2011, the Petitioner and Mr. Jayanth met the 3rd and 4th Respondents whereby the Petitioner outlined the following proposals (Petitioner’s Proposals) –

 

(a) a company would be set up in Dubai (Dubai Company) which would be owned by ALCIM International Pte. Ltd., a company incorporated in Singapore and owned equally by the Petitioner and 3rd Respondent;

 

(b) several other companies would be incorporated and would be co-owned by the Petitioner, 3rd Respondent and Mr. Jayanth; and

 

(c) the 2nd Respondent would complete all the work secured by the Dubai Company at a nominal sum to be determined by the Dubai Company.

 

According to the Petitioner, the Petitioner’s Proposals would reduce “Bumi risk’, namely the risk that the 4th Respondent would take control of the Companies;

 

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(12) the 3rd Respondent objected to the Petitioner’s Proposals on the following grounds –

 

(a) the Petitioner’s Proposals would exclude the 4th Respondent and would constitute an insult to the 4th Respondent because of the Petitioner’s total failure to appreciate the 4th Respondent’s efforts to build up the Companies and to enable the Companies to develop business with Petronas; and

 

(b) the Petitioner’s Proposals would amount to a “transfer pricing” which would deprive the 2nd Respondent of its rightful profits and would be contrary to the spirit of the status awarded by the Malaysian Multimedia Super Corridor to the 2nd Respondent;

 

(13) the 3rd Respondent discovered a document generated by the Petitioner on or about 25.3.2011 (Alleged Petitioner’s

 

Document) which set out the Petitioner’s plan for the Companies and this plan had been described by the Respondent as the “Petitioner’s Grand Plan”. The Alleged Petitioner’s Document –

 

(a) had been recovered from the Petitioner’s Laptop which had been “confiscated” by the Companies when the Petitioner was suspended from work;

 

(b) had been encrypted to prevent access by any person other than the Petitioner; and

 

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(c) had been “checked out’ from the Companies’ computer system by the Petitioner so as to prevent the 3rd and 4th Respondents from having access to the Alleged Petitioner’s Document;

 

(14) the Alleged Petitioner’s Document stated 2 scenarios as follows

 

(a) the first scenario would arise if the 3rd Respondent agreed to the Petitioner’s Proposals (1st Scenario); and

 

(b) the second scenario concerned the 3rd Respondent’s disagreement with the Petitioner’s Proposals (2nd Scenario);

 

(15) the 1st Scenario is as follows –

 

(a) ALCIM International Pte. Ltd. would be formed in Singapore with the Petitioner holding 50% of its shareholding through the Petitioner’s company (Toralf Mueller Pte. Ltd.) and the 3rd Respondent owning the remaining 50% shares. The Petitioner had also provided for the event that investors would come into ALCIM International Pte. Ltd. through an Initial Public Offer;

 

(b) at the regional level, ALCIM SEA Sdn. Bhd. would be formed to deal with Malaysia and AAA (MEA) Ltd. would

 

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deal with Arab states with subsidiary companies incorporated to deal with local sponsors. ALCIM SEA Sdn. Bhd. and AAA (MEA) Ltd. would have the following same shareholders –

 

(i) 52% shares would be owned by ALCIM International

 

Pte. Ltd.; and

 

(ii) Toralf Mueller Pte. Ltd., 3rd Respondent and Mr. Jayanth would each hold 16% shares; and

 

(c) at the country level, the 2nd Respondent would be re-named as ALCIM MYS Sdn. Bhd. and would be 100% owned by ALCIM SEA Sdn. Bhd. There would be a new company, ALCIM GLC Sdn. Bhd., which would be formed as a Special Purpose Vehicle to deal with all licensing issues. Shares in ALCIM GLC Sdn. Bhd. would be held by –

 

(i) Bumiputera proxies of the Petitioner and 3rd Respondent; and

 

(ii) ALCIM MYS Sdn. Bhd.

 

(16) according to the 2nd Scenario –

 

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(a) there would be a “Toralf Mueller Group of companies” (Toralf Mueller Group) represented at the international level by Toralf Mueller Pte. Ltd. (which would be 100% owned by the Petitioner);

 

(b) at the regional level, Toralf Mueller Group would be represented by AAA (MEA) Ltd. AAA (MEA) Ltd. would have the following shareholding –

 

(i) 52% shares would be owned by the Petitioner through

 

Toralf Mueller Pte. Ltd.; and

 

(ii) Mr. Jayanth would hold 48% shares;

 

(c) at the country level, the Toralf Mueller Group would be represented by AAA UAE Ltd. and AAA QAT Ltd. which would be 100% owned by AAA (MEA) Ltd. (with provision for local investors, if required);

 

(d) the Petitioner and 3rd Respondent would each have 50% shareholding in the 1st Respondent;

 

(e) the 2nd Respondent would be 100% owned by the 1st Respondent and would lose its Petronas license as the 2nd Respondent would no longer be a Bumiputera company. The Petronas contracts would then be completed by AAA Ltd. Sdn. Bhd.; and

 

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(f) the Toralf Mueller Group would have a number of Special Purpose Vehicles to undertake projects which require local shareholders and this would include a Malaysian company which would apply for a Petronas license;

 

(17) the Petitioner’s Grand Plan was conceived as early as March 2011 by the Petitioner and Mr. Jayanth. If the 3rd Respondent did not agree to the Petitioner’s proposal to de-couple the 2nd Respondent from the proposed ALCIM Group of Companies (Petitioner’s Decoupling Plan), the Petitioner would take control of the business by causing –

 

(a) the 2nd Respondent to lose its Petronas license; and

 

(b) the Petitioner’s nominee Bumiputera company would take over Petronas contracts;

 

(18) the Petitioner intended to proceed with establishing ALCIM in the Middle East as a separate company from the 1st and 2nd Respondents to the exclusion of the 3rd and 4th Respondents. The Petitioner and Mr. Jayanth had approached a sister company of the company that managed the servers of the 2nd Respondent, @Quest Solution Sdn. Bhd., to collaborate in the installation, configuration, system integration and testing of a solution called “Sharepoint 2010 Farm Infrastructure

 

G6. Discussions on “buy-out’

 

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(19) the 3rd Respondent was oblivious to the Petitioner’s Grand Plan.

 

As the 3rd Respondent could not agree to the Petitioner’s Decoupling Plan, the 3rd Respondent proposed for the Petitioner to buy out the 3rd Respondent’s shareholding in the Companies;

 

(20) on 20.6.2011, the 3rd Respondent called for a meeting at the Companies’ office at Cyberjaya which was attended by the Petitioner, 3rd and 4th Respondents and Mr. Jayanth (Meeting on 20.6.2011). At the Meeting on 20.6.2011, the 3rd Respondent presented the Petitioner with the following 4 “options” (3rd Respondent’s 4 Options) –

 

(a) both the Petitioner and 3rd Respondent “liquidate” their shares in the Companies by selling to a third party;

 

(b) the Petitioner buys the 3rd Respondent’s shares in the Companies (3rd Respondent’s Shares) based on a certain ratio;

 

(c) a third party buys over the 3rd Respondent’s Shares; or

 

(d) a third party takes over the majority of the shares being 51% and the balance 49% shares will be held by the Petitioner and 3rd Respondent;

 

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(21) the 3rd Respondent denied giving the Petitioner an ultimatum to wind up the Companies;

 

G7. 4th Respondent’s execution of blank share transfer forms under

 

duress

 

(22) in June 2011, the Petitioner’s Grand Plan was put into motion when the Petitioner started to “harass” the 4th Respondent to sign blank share transfer forms (Blank Share Transfer Forms) in relation to the transfer of the 4th Respondent’s shares in the Companies (4th Respondent’s Shares);

 

(23) the 4th Respondent caved in to the Petitioner’s “pressure” and signed the Blank Share Transfer Forms under duress on 16.6.2011. When the Petitioner was confronted by the 3rd Respondent regarding the Petitioner’s breach of the 2 Trust Deeds with respect to the Blank Share Transfer Forms, the Petitioner lied to the 3rd Respondent by stating that the Petitioner would return the Blank Share Transfer Forms (signed by the 4th Respondent) if the 4th Respondent would sign fresh blank share transfer forms with the correct figures as the earlier Blank Share Transfer Forms were defective;

 

(24) the Petitioner intended to use the Blank Share Transfer Forms to transfer the 4th Respondent’s Shares to Puan Rubiah;

 

G8. Letters from 3rd and 4th Respondent to company secretary

 

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(25) To ensure that the Security Documents were not “misused” by the Petitioner, the majority of the Companies’ BOD, including the 3rd and 4th Respondents, wrote letters to the company secretary of the Companies (Company Secretary) to put in place a certain procedure in respect of DCR “for purposes of good corporate governance practice and uniformity”;

 

G9. Conspiracy to divert 2nd Respondent’s business

 

(26) the 3rd Respondent had subsequently discovered several documents to evidence a conspiracy between the Alleged Conspirators to –

 

(a) cause a change in the Bumiputera shareholding in the 2nd Respondent to a non-Bumiputera shareholding without notification to Petronas. This would cause a breach of the 2nd Respondent’s Petronas license (Petronas License) and consequently, the 2nd Respondent would lose the Petronas License;

 

(b) cause the 1st Respondent to be liquidated, wound up or dissolved;

 

(c) to set up a new company (Newco) to take over the 2nd Respondent’s Petronas contracts and Newco would have the following shareholding –

 

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(i) Mr. Jayanth – 22.5%;

 

(ii) Mr. Jayanth (on trust for the Petitioner) – 22.5%;

 

(iii) Puan Rubiah – 10%;

 

(iv) Encik Syahmi – 5%; and

 

(v) Bumiputera investor – 40%;

 

(d) the Petitioner and Mr. Jayanth planned to set up a company called “IMISIT to apply to the Ministry of Finance and Petronas for a Petronas license. The term “IMISIT’ was coined by the “ALCIM” management to refer to “Information Management, Information Systems, Information Technology”. Hence, the use of the name “IMISIT’ by the Petitioner and Mr. Jayanth, would breach their fiduciary duties owed to the Companies; and

 

(e) in furtherance of the conspiracy, the Petitioner and Mr. Jayanth considered an option of demanding the 1st Respondent’s repayment of an advance made by the Petitioner to the 1st Respondent for the 2009 Suit (Advance To 1st Respondent). The repayment of Advance To 1st Respondent would fund the new companies to be set up pursuant to the conspiracy;

 

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G10. Petitioner’s mismanagement of 2nd Respondent which resulted in 2nd Respondent’s re-organisation

 

(27) a BOD meeting of the 2nd Respondent was held on 15.8.2011 (2nd Respondent’s BOD Meeting dated 15.8.2011) for the

 

Petitioner to present the 2nd Respondent’s financial performance as the 2nd Respondent’s CEO (Petitioner’s Report). From that presentation of the Petitioner’s Report at the 2nd Respondent’s BOD Meeting dated 15.8.2011, the Petitioner had mismanaged the 2nd Respondent and had no concrete proposal for the future business development of the 2nd Respondent;

 

(28) the 2nd Respondent’s BOD had considered the Petitioner’s Report and had decided that it was necessary to streamline the 2nd Respondent’s management. Hence, the 2nd Respondent’s BOD approved a new “Organisation Chart’ which defined the scope and work for each of the 2nd Respondent’s management divisions;

 

G11. Appointment of additional directors for Companies (Additional Directors)

 

(29) in view of the Petitioner’s mismanagement of the Companies, it was necessary to appoint Additional Directors;

 

(30) the first appointment of the Additional Directors was done by way of DCR which was “inadvertently” not circulated to the Petitioner. As such, the Additional Directors resigned and were re-appointed

 

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at “fulr BOD meetings of the Companies where the Petitioner was present and was able to vote. At these BOD meetings to appoint the Additional Directors, the 4th Respondent voted in the interest of the Companies as the Additional Directors were appointed to “turn around” the Companies due to their mismanagement by the Petitioner;

 

G12. Petitioner’s attempt to register transfer of 4th Respondent’s Shares, appoint new directors of Companies and effect resignation of 4th Respondent as director of Companies

 

(31) in furtherance of the Petitioner’s Grand Plan, after the 2nd Respondent’s BOD Meeting dated 15.8.2011, on 16.8.2011 the Petitioner went to the Company Secretary’s office to submit the share transfer forms signed by the 4th Respondent under duress by the Petitioner (Petitioner’s 1st Attempt). As the 3rd Respondent did not agree to the Petitioner’s 1 st Attempt, the Petitioner had breached the 2 Trust Deeds. Furthermore, the 4th Respondent had not been paid for the transfers of the 4th Respondent’s Shares;

 

(32) on 17.8.2011, the Petitioner submitted 2 DCR’s of the Companies purportedly signed by, among others, the 3rd and 4th Respondents, to appoint new directors for the Companies. One of the new directors to be appointed was Puan Rubiah. On 18.8.2011, the Petitioner submitted to the Company Secretary, among others, letters of resignation of the 4th Respondent and Cik Mardina as directors of the Companies;

 

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(33) several objections were lodged with the Company Secretary and Companies Commission of Malaysia (SSM) against the Petitioner’s unlawful attempts to, among others, register the transfers of the 4th Respondent’s Shares, appoint new directors for the Companies and effect the resignation of the 4th Respondent and Cik Mardina as directors of the Companies. The 3rd and 4th Respondents as well as Cik Mardina had also lodged police reports in respect of the Petitioner’s above attempts;

 

(34) despite the Petitioner having knowledge of the aforesaid objections lodged with the Company Secretary, on 20.9.2011 the Petitioner re-submitted to the Company Secretary the amended share transfer forms signed by the 4th Respondent (Petitioner’s 2nd Attempt). Consequently, on 21.9.2011 the 4th Respondent lodged another complaint with the Company Secretary in respect of the Petitioner’s 2nd Attempt;

 

G13. Petitioner’s attempts to derail 2009 Suit

 

(35) both the Petitioner and Mr. Muralee are key witnesses for the 1st Respondent in the 2009 Suit. In furtherance of the Petitioner’s Grand Plan, Mr. Muralee and the Petitioner conspired to put pressure on the 3rd and 4th Respondents to transfer their shares in the Companies to the Petitioner at an undervalue by threatening to sabotage the 2009 Suit;

 

(36) on 15.7.2011 the Petition sent an email to the 1st Respondent’s learned counsel in the 2009 Suit, Dato’ Stanley, seeking a quantification of a potential settlement sum for the 2009 Suit and

 

40

 

asking about the possible impact if the Petitioner were to withdraw from the 2009 Suit;

 

(37) the Petitioner sent an email dated 4.9.2011 to Dato’ Stanley stating that the Petitioner might withdraw himself from the 2009 Suit and the Petitioner was considering to discharge Dato’ Stanley from representing the Petitioner in the 2009 Suit;

 

(38) in furtherance of the conspiracy between Mr. Muralee and the Petitioner, Mr. Muralee asked the 3rd Respondent to meet Mr. Muralee at Mr. Muralee’s office on 6.9.2011. The 3rd Petitioner and his brother, Mr. Thomas George, met Mr. Muralee at Mr. Muralee’s office on 6.9.2011 (Meeting on 6.9.2011). At the Meeting on 6.9.2011, Mr. Muralee informed the 3rd Respondent that if the 3rd Respondent did not accept the Petitioner’s offer regarding the share buy-out, the Petitioner would get his own lawyer in the 2009 Suit, withdraw from the 2009 Suit and become a hostile witness in the 2009 Suit. The 3rd Respondent had secretly recorded the Meeting on 6.9.2011 and a transcript of this record had been exhibited in the Respondents’ first affidavit in court enclosure no. 5 (Respondents’ 1st Affidavit);

 

(39) on 7.9.2011, Mr. Muralee through his law firm, Messrs JM, wrote to Dato’ Stanley’s firm, Messrs Isaacs, Tan & Chu (Messrs ITC), to inform Messrs ITC that Messrs JM had been appointed to act for the Petitioner in the 2009 Suit and asked Messrs ITC to hand over all cause papers for the 2009 Suit to Messrs JM. Mr. Muralee persisted in this course of action despite Dato’ Stanley’s advice that Mr. Muralee could not represent any party in the 2009 Suit as Mr. Muralee would be a witness in the 2009 Suit;

 

41

 

(40) in the 2009 Suit, the Petitioner had taken several legal positions which were contrary to the interest of the 1st Respondent. The 1st Respondent had applied in the 2009 Suit to remove the Petitioner as a co-plaintiff in the 2009 Suit;

 

G14. Petitioner’s unlawful act to recover Advance To 1st Respondent

 

(41) in furtherance of the Petitioner’s Grand Plan, at the 1st Respondent’s BOD meeting on 24.8.2011, the Petitioner insisted for the 1st Respondent’s BOD to table the Petitioner’s motion to wind up the 1st Respondent. The 3rd Respondent refused to so on the ground that the winding up of the 1st Respondent would adversely affect the 1st Respondent in the 2009 Suit. The Petitioner then requested for the 1st Respondent’s repayment of Advance To 1st Respondent. The 1st Respondent’s repayment of Advance To 1st Respondent, would also have an adverse effect on the 1st Respondent in the 2009 Suit. The 1st Respondent’s BOD resolved to take all necessary action against any director who would undermine the 2009 Suit in any manner (1st Respondent’s BOD Resolution dated 24.8.2011);

 

(42) despite the 1st Respondent’s BOD Resolution dated 24.8.2011, the 1st Respondent received a notice under s 218(2)(a) CA from Messrs JM on 9.7.2011 (1st Section 218 Notice) demanding the 1st Respondent’s repayment of Advance To 1st Respondent within 21 days from the date of 1st Section 218 Notice, failing which a winding up petition would be filed against the 1st Respondent. The 1st Section 218 Notice stated that the Advance To 1st Respondent was Euro 200,000;

 

42

 

(43) the 1st Section 218 was in accordance with the Petitioner’s Grand Plan to wind up the 1st Respondent which would result in the following –

 

(a) the cancellation of the Petronas License;

 

(b) this would pave the way for the Alleged Conspirators to divert the 2nd Respondent’s business to the new companies owned by the Alleged Conspirators’;

 

(c) there would have an adverse effect on the 2009 Suit; and

 

(d) the 1st Section 218 would force the 3rd Respondent to sell the 3rd Respondent’s Shares to the Petitioner at an undervalue;

 

(44) the Advance To 1st Respondent was made by the Petitioner and 3rd Respondent without fixed terms for repayment and without any interest. As the 2009 Suit was still pending, the Advance To 1st Respondent was not yet repayable by the 1st Respondent. The Advance To 1st Respondent was RM593,700.70 and not Euro 200,000 as certified by the Petitioner as the 1st Respondent’s director on 31.12.2010;

 

(45) the 1st Respondent challenged the legality of the 1st Section 218 Notice and on 30.9.2011, Messrs JM issued a second notice

 

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under s 218(2)(a) CA (2nd Section 218 Notice) demanding the 1st Respondent’s repayment of Advance To 1st Respondent amounting to RM593,700.70 within 21 days from the date of the 2nd Section 218 Notice;

 

G15. Increase in 1st Respondent’s paid-up share capital

 

(46) on 29.11.2011, the 1st Respondent’s BOD met (1st Respondent’s BOD Meeting dated 29.11.2011) and resolved, among others, the following –

 

(a) to repay the Advance To 1st Respondent so as to remove the Petitioner’s threat to wind up the 1st Respondent;

 

(b) to repay the Advance To 1st Respondent, the 1st Respondent’s paid-up share capital was increased from RM250,000 to RM500,000; and

 

(c) to ratify and affirm the 3rd Respondent’s action in appointing Messrs Bodipalar Ponnudurai De Silva (Messrs BPDS) to take legal action on behalf of the 1st Respondent against the Petitioner and other parties;

 

(47) the Petitioner was offered his portion of the increase in the 1st Respondent’s paid-up share capital but the Petitioner did not take up this offer. Consequently, the 3rd and 4th Respondents

 

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took up all the new paid-up shares issued by the 1st Respondent;

 

G16. Breach of 2nd Respondent’s intellectual property (IP) rights

 

(48) the main asset of the 2nd Respondent is its IP rights in the

 

Information Technology solution developed specifically by the 2nd Respondent for the 2nd Respondent’s customers (2nd

 

Respondent’s IP Rights);

 

(49) at the 2nd Respondent’s BOD Meeting dated 15.8.2011, the 3rd Respondent had asked whether the 2nd Respondent’s IP Rights had been filed with Perbadanan Harta Intelek. The Petitioner replied “no” and the Petitioner explained that a lawyer had advised the Petitioner that it would be a problem to protect a “business process” and this would cost a lot of money. The Petitioner assured the 2nd Respondent’s BOD that so long as the 2nd Respondent controlled the “source code”, the 2nd Respondent’s IP Rights would be protected. The 3rd Respondent was dissatisfied with the Petitioner’s explanation and stressed that the 2nd Respondent’s IP Rights should be “secured’ and documented on an urgent basis;

 

(50) the protection of the 2nd Respondent’s IP Rights was raised in the 1st Respondent’s BOD Meeting dated 24.8.2011 which passed the 1st Respondent’s BOD Resolution dated 24.8.2011. According to 1st Respondent’s BOD Resolution dated 24.8.2011, the 1st Respondent’s corporate representative in the 2nd Respondent’s BOD should convey to the 2nd Respondent’s BOD the concern of the 1st Respondent’s BOD regarding the protection of the 2nd Respondent’s IP Rights. The Petitioner and

 

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Mr. Jayanth voted against the 1st Respondent’s BOD Resolution dated 24.8.2011;

 

(51) the 3rd Respondent proceeded to engage KASS International Sdn. Bhd. to review the 2nd Respondent’s IP Rights and to do all that was necessary to secure and protect the 2nd Respondent’s IP Rights;

 

(52) the 3rd Respondent had discovered documents to show that the Petitioner, Mr. Jayanth, Ms. Ooi, Ms. Sunitha, Mr. Chan and Mr. Muralee had conspired to misappropriate the 2nd Respondent’s IP Rights. In the 2009 Suit, the Petitioner’s defence and counterclaim disclosed a statutory declaration (SD) made by the Petitioner while the Petitioner was employed by the 2nd Respondent which claimed copyright in the 2nd Respondent’s confidential information;

 

(53) the Respondents have filed a suit in the Kuala Lumpur High Court in respect of the 2nd Respondent’s IP Rights (Copyright Suit). On 10.2.2015 the Copyright Suit, among others, had been withdrawn without any liberty to file afresh.

 

G17. Misappropriation of RM50.000 belonging to 2nd Respondent

 

(54) sometime in early September 2011, the 3rd Respondent discovered that 5 cheques of RM10,000 each, totalling RM50,000, had been issued by the 2nd Respondent to Messrs JM on 24.8.2011 (5 Cheques). The 3rd Respondent’s

 

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“investigation” had shown that the Petitioner, Mr. Jayanth, Ms. Ooi, Encik Syahmi, Cik Harynah and Mr. Muralee had conspired to misappropriate RM50,000 in the 5 Cheques from the 2nd Respondent in the following manner –

 

(a) the Petitioner had instructed Ms. Ooi to issue 5 separate payment vouchers of RM10,000 each for the 5 Cheques (5 PV’s). There was no supporting document such as fee quote, purchase order or invoice for the 5 PV’s and 5 Cheques;

 

(b) there was a 2nd Respondent’s DCR dated 28.1.2011 which stated that any cheque above RM10,000 to be issued by the 2nd Respondent, should be signed by 2 signatories from “Group A” which comprised the Petitioner, 3rd and 4th Respondents as well as Cik Nurul (2nd Respondent’s DCR dated 28.1.2011);

 

(c) Ms. Ooi issued the 5 PV’s on 24.8.2011 despite having knowledge of the 2nd Respondent’s DCR dated 28.1.2011. Ms. Ooi did not raise any concern regarding the 5 PV’s to the members of the 2nd Respondent’s BOD (other than the Petitioner);

 

(d) Mr. Jayanth as the 2nd Respondent’s COO had knowledge of the 2nd Respondent’s DCR dated 28.1.2011. Yet, Mr. Jayanth approved the 5 PV’s on 24.8.2011 and failed to raise any concern regarding the 5 PV’s to the members of the 2nd Respondent’s BOD (other than the Petitioner);

 

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(e) upon Mr. Jayanth’s approval of the 5 PV’s, Cik Harynah instructed the 2nd Respondent’s Finance Department to prepare the 5 Cheques. Once the 5 Cheques were signed by the Petitioner and Encik Syahmi, Cik Harynah gave the 5 Cheques to Mr. Jayanth to be hand delivered personally to Messrs JM. All these were done on 24.8.2011;

 

(f) Cik Harynah concealed the 5 PV’s in her desk and only produced the 5 PV’s after the 3rd Respondent requested for them in early September 2011. To disguise the nature of the payment of the 5 Cheques, Cik Harynah recorded such a payment in the 2nd Respondent’s books as an “advance” and not as payment for Messrs JM’s legal service;

 

(g) on 5.9.2011, the 3rd Respondent wrote to Mr. Jayanth, Cik Harynah and Ms. Ooi for an explanation for the 5 PV’s and 5 Cheques. All of them responded by essentially stating that the 5 PV’s and 5 Cheques had been prepared on the Petitioner’s instruction;

 

(h) on 6.9.2011, Ms. Ooi entered into the 2nd Respondent’s “Enterprise Content Management System” (ECM), 2 documents as follows –

 

(i) a letter from Messrs JM purportedly dated 18.8.2011 to the 2nd Respondent which requested for a letter of appointment from the 2nd Respondent and a non-

 

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refundable retainer fee of RM50,000 (Messrs JM’s Letter Purportedly dated 18.8.2011); and

 

(ii) the 2nd Respondent’s letter purportedly dated 20.8.2011 which appointed Messrs JM to act for the 2nd Respondent, Petitioner and 2nd Respondent’s management and staff against the 3rd, 4th Respondents and Cik Mardina (2nd Respondent’s Letter

 

Purportedly dated 20.8.2011);

 

(i) the 3rd Respondent discovered evidence of telephone messages between the Petitioner and Mr. Muralee which showed, among others, that Messrs JM’s Letter Purportedly dated 18.8.2011 was only prepared on 6.9.2011 (after the 3rd Respondent had raised queries regarding the 5 PV’s and 5 Cheques);

 

(j) on 7.9.2011, the 2nd Respondent sent a letter (signed by the 3rd Respondent as the 2nd Respondent’s executive chairman) to Messrs JM to query the purpose of the 2nd Respondent’s payment of RM50,000 to Messrs JM. Mr. Muralee sent an email dated 7.9.2011 to the 3rd Respondent stating that –

 

(i) the 3rd Respondent should ask the Petitioner regarding the 2nd Respondent’s payment of RM50,000 to Messrs JM; and

 

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(ii) Messrs JM would reply in due course;

 

(k) on 27.9.2011, Messrs JM replied to the 2nd Respondent, as follows, among others –

 

(i) the Petitioner as the 2nd Respondent’s CEO and director had met Mr. Muralee regarding the 2nd Respondent’s matters and Mr. Muralee had advised the Petitioner accordingly (Mr. Muralee’s Advice);

 

(ii) the 3rd Respondent could “procure” Mr. Muralee’s Advice from the Petitioner; and

 

(iii) Messrs JM was not required to give a breakdown for a retainer fee;

 

(l) the payment of RM50,000 was made to Messrs JM for legal service rendered by Messrs JM for the Petitioner’s own personal legal matters. This was because Messrs JM acted for the Petitioner in the following matters –

 

(i) the negotiations for the buy-out of shares owned by the 3rd and 4th Respondents in the Companies;

 

(ii) the 1st and 2nd Section 218 Notices;

 

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(iii) Messrs JM wrote to Messrs ITC to take over the conduct of the 2009 Suit for the Petitioner;

 

(iv) Messrs JM acted for the Petitioner against the Companies when Messrs JM issued notices dated 7.9.2011 regarding defamation;

 

(v) Messrs JM acted for the Petitioner in writing to the 4th Respondent to demand the transfer of the 4th Respondent’s Shares to the Petitioner; and

 

(vi) Messrs JM acted for the Petitioner against the Companies in respect of the Petitioner’s suspension as the 2nd Respondent’s CEO;

 

(m) the 2nd Respondent engaged Messrs Crowe Horwath (Messrs CH) to do a forensic audit. Messrs CH prepared a report dated 28.9.2011 (Messrs CH’s Report) which stated, among others –

 

(i) the Petitioner and Encik Syahmi had “intentionally” breached their fiduciary duties owed to the 2nd Respondent by signing the 5 Cheques which had circumvented the 2nd Respondent’s DCR dated 28.1.2011; and

 

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(ii) there appeared to be an “inducement for Mr. Jayanth, Ms. Ooi and Encik Syahmi to assist the Petitioner to issue and expedite the payment of RM50,000 to Messrs JM as they had been proposed by the Petitioner to be the 2nd Respondent’s new directors; and

 

(n) the 3rd Respondent as the 2nd Respondent’s executive chairman, had lodged a police report on 26.9.2011 regarding the misappropriation of 2nd Respondent’s funds of RM50,000 against the Petitioner, Mr. Jayanth, Ms. Ooi, Encik Syahmi and Mr. Muralee (2nd Respondent’s Police Report dated 26.9.2011). The Respondents’ 1st Affidavit exhibited a letter dated 17.2.2012 from the Sentul District’s Commercial Crime Investigation Department which stated that the police was still investigating the 2nd Respondent’s Police Report dated 26.9.2011;

 

G18. Fear that 2nd Respondent’s database had been duplicated

 

(55) on or about 14.7.2011, Ms. Sunitha had emailed to all the 2nd Respondent’s staff stating that the ECM was facing some problems and could not be used. These “problems” regarding the ECM persisted from July to September 2011 with emails dated 1.8.2011 and 17.8.2011 from Ms. Sunitha to the 2nd Respondent’s staff;

 

(56) the Companies had a “legitimate feat that 2 or more of the Alleged Conspirators had deliberately ensured that the ECM was not populated with documents for a period of time so as to enable the Alleged Conspirators to down-load all relevant

 

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information from the ECM and divert business away from the 2nd Respondent. Such a fear was “fortified” by the fact that Ms. Sunitha was able to up-load into the ECM, Messrs JM’s Letter Purportedly dated 18.8.2011 and 2nd Respondent’s Letter Purportedly dated 20.8.2011, despite Ms. Sunitha’s “representation” that nothing could be up-loaded into the ECM;

 

G19. Petitioner’s suspension and discovery of “incriminating” evidence

 

(57) by way of a letter dated 12.9.2011 (2nd Respondent’s Letter dated 12.9.2011), among others –

 

(a) the 2nd Respondent suspended the Petitioner as the 2nd Respondent’s CEO with full pay pending investigation and further notice from the 2nd Respondent; and

 

(b) the Petitioner was required to return immediately all property, documents and information of the 2nd Respondent;

 

(58) the Petitioner placed the BlackBerry in an envelope. This envelope and Laptop were then put by the Petitioner into a courier bag (Courier Bag) which was sealed and marked “Only To Be Opened In My Presence!” by the Petitioner;

 

(59) upon receipt of the Courier Bag by the 3rd Respondent, the 3rd Respondent immediately handed the Courier Bag to Mr. Rajesh (Mr. Rajesh) of “JR Control Risk’, an expert in “Computer

 

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Forensic and Data Investigation”. Mr. Rajesh opened the Courier Bag in the 3rd Respondent’s presence and made a digital image of the BlackBerry and Laptop (Digital Image). The original information in the BlackBerry and Laptop had not been altered in any manner and had been preserved as evidence. The BlackBerry and Laptop were put back into the Courier Bag which was then re-sealed;

 

(60) Mr. Rajesh proceeded to extract information from the Digital Image. Certain information had been encrypted and had to be decrypted by Mr. Rajesh before such information could be read. The information uncovered from the BlackBerry and Laptop showed a conspiracy by the Alleged Conspirators to defraud the Companies as set out above;

 

G20. Petitioner’s breach of fiduciary duties owed to Companies

 

(61) as elaborated above, the Respondents aver that the Petitioner had breached fiduciary duties owed to the Companies and consequently, the Petitioner had not come to this court with clean hands and was therefore not entitled to any relief under s 181 CA;

 

G21. Respondents’ response to 10 Grievances

 

(62) in respect of the 1st Grievance –

 

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(a) the friction between the Petitioner and 3rd Respondent started when the Petitioner insisted on the Petitioner’s Decoupling Plan (the implementation of a new corporate structure for the purpose of expansion in the Middle East which would cut off the 2nd Respondent);

 

(b) the 3rd Respondent did not threaten to wind up the Companies. The Petitioner and 3rd Respondent were discussing the 3rd Respondent’s 4 Options so as to part ways amicably; and

 

(c) the 1st and 2nd Section 218 Notices were issued by the Petitioner to “destroy’ the Companies. Furthermore, the Petitioner claimed copyright to the 2nd Respondent’s confidential information;

 

(63) the Respondents deny the 2nd Grievance on the following grounds –

 

(a) the 2nd Respondent’s payment of RM672,000 to the 1st Respondent for “Technical Advisory Services” had been resolved at the 1st Respondent’s BOD meeting on 24.8.2011 (1st Respondent’s BOD Meeting dated 24.8.2011); and

 

(b) the Petitioner had an ulterior motive to propose at the 1st Respondent’s BOD Meeting dated 24.8.2011 for the 2nd Respondent to stop paying the 1st Respondent for “Technical Advisory Services”. This was because the

 

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Petitioner wanted the 2nd Respondent to have additional cash so that the Petitioner could pressurise the 3rd Respondent to sell the 3rd Respondent’s Shares to the Petitioner;

 

(64) concerning the 3rd Grievance –

 

(a) there was no “hostile takeover’ of the Companies by the 3rd and 4th Respondents. The 2nd Respondent’s restructuring was necessary due to the Petitioner’s own mismanagement of the 2nd Respondent;

 

(b) the Petitioner had earlier agreed for the 3rd Respondent to be the executive chairman of the 2nd Respondent. As such, the 2nd Respondent’s restructuring (which appointed the 3rd Respondent as the 2nd Respondent’s executive chairman) did not place the 3rd Respondent in a “better’ position except that the 3rd Respondent could take a more active role in the 2nd Respondent’s operations; and

 

(c) as there was no joint instruction from the Petitioner and 3rd Respondent to the 4th Respondent on how the 4th Respondent should vote in the 2nd Respondent’s BOD meetings, it was open to the 4th Respondent to vote in any manner deemed fit by the 4th Respondent, taking into account the 2nd Respondent’s interest;

 

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(65) the 4th Grievance is disputed by the Respondents on the

 

following grounds –

 

(a) the 3rd and 4th Respondents did not surreptitiously appoint the Additional Directors. The Additional Directors resigned because the Company Secretary inadvertently omitted to send the relevant DCR’s to the Petitioner; and

 

(b) the Additional Directors were then re-appointed at the Companies’ BOD meetings attended by the Petitioner;

 

(66) regarding the 5th Grievance, the Petitioner was removed as the 2nd Respondent’s CEO and director as well as the 1st Respondent’s director because the Petitioner had breached the following fiduciary duties owed to the Companies –

 

(a) the Petitioner issued the 1st and 2nd Section 218 Notices against the 1st Respondent despite the “clear understanding” between the Petitioner and 3rd Respondent that the Advance To 1st Respondent was to be used to finance the 2009 Suit;

 

(b) the Petitioner had conspired with the other Alleged Conspirators to deprive the 2nd Respondent of the benefit of the 2nd Respondent’s IP Rights;

 

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(c) the Petitioner had conspired with the other Alleged Conspirators to deprive the 2nd Respondent of the 2nd Respondent’s business; and

 

(d) the Petitioner had been given ample notice of meetings which had been called to remove the Petitioner and the Petitioner could have made representations against such removals but the Petitioner had failed to do so;

 

(67) as regards the 6th Grievance, the Respondents explained that since the Petitioner was no longer a director and employee of the Companies, the Petitioner could not remain as an authorised cheque signatory for the Companies;

 

(68) the Respondents denied the 7th Grievance as follows –

 

(a) the Petitioner had failed to show any risk of dissipation of the Companies’ assets;

 

(b) the 3rd and 4th Respondents had not abused their powers as the Companies’ authorised cheque signatories;

 

(c) the Petitioner had misappropriated RM50,000 by causing the issue of the 5 Cheques in favour of Messrs JM;

 

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(d) when the 3rd Respondent and Madam Thomas incorporated the 1st Respondent, the 1st Respondent opened a CIMB (known at that time as Bumiputra-Commerce Bank Bhd.) bank account in Rawang (Rawang CIMB Account). Since Rawang CIMB Account was the only bank account at that time for the 1st Respondent, all revenue and expenditure of the 1st Respondent was transacted through Rawang CIMB Account;

 

(e) when the Petitioner joined the 1st Respondent on 13.9.2004, the Petitioner requested that money payable to the Petitioner, be paid to a company in Switzerland owned by the Petitioner and the Petitioner’s wife. At that time, as the Petitioner was still working for ALSTOM Asia Pacific, the Petitioner agreed to maintain the 3rd Respondent and Madam Thomas as the only authorised cheque signatories for the Rawang CIMB Account;

 

(f) when revenue was about to start coming in for the 1st Respondent, the Petitioner requested for the 1st Respondent to open another CIMB (known at that time as Bumiputra-Commerce Bank Bhd.) bank account in Menara Choy Fook On, Petaling Jaya (Petaling Jaya CIMB Account). The authorised cheque signatories for the Petaling Jaya CIMB Account were the Petitioner, 3rd Respondent and Madam Thomas;

 

(g) the Petitioner agreed with the 3rd Respondent that the Rawang CIMB Account would be used to keep all money due to the 3rd Respondent. That was why the Petitioner allowed the 3rd Respondent and Madam Thomas to remain

 

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as the only authorised cheque signatories for the Rawang CIMB Account;

 

(h) it was also agreed by the Petitioner and 3rd Respondent that any payment due to the Petitioner, would be paid from the Petaling Jaya CIMB Account; and

 

(i) in view of the above agreement between the Petitioner and 3rd Respondent, payments due to 3rd Respondent were made from the Rawang CIMB Account. This explained the payments made from the Rawang CIMB Account to the 3rd Respondent’s mother and daughter which were from money due to be paid by the Companies to the 3rd Respondent;

 

(69) in respect of the 8th and 10th Grievances –

 

(a) the 3rd and 4th Respondents did not refuse to recognise the 2 Trust Deeds. The Respondents were however “advised” that the 2 Trust Deeds were invalid and unenforceable;

 

(b) the 3rd and 4th Respondents did not breach the 2 Trust Deeds; and

 

(c) the Petitioner breached the 2 Trust Deeds as explained in the Respondents’ 1st Affidavit; and

 

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(70) the 9th Grievance was disputed by the Respondents as follows –

 

(a) it was necessary to increase the 1st Respondent’s paid-up share capital so as to remove the Petitioner’s threat to wind up the 1st Respondent (based on the Advance To 1st Respondent); and

 

(b) the Petitioner was offered his portion of the increase in the 1st Respondent’s paid-up share capital but the Petitioner refused to do so. In the circumstances, the Petitioner is now estopped from alleging dilution of the Petitioner’s shareholding in the 1st Respondent.

 

H. Is this court bound by Findings in Conspiracy Suit?

 

35. The Conspiracy Suit did not concern the 1st, 6th and 7th Grievances. Hence, there was no finding regarding the 1st, 6th and 7th Grievances in the Conspiracy Suit. The Petitioner’s learned counsel, Mr. Wong Rhen Yen (Mr. Wong), has submitted that this court is bound by all the Findings in Conspiracy Suit. In support of this contention, the Petitioner’s learned counsel relies on the following reasons:

 

(a) there are issues in the Conspiracy Suit which are similar to the questions to be tried in this case;

 

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(b) the Conspiracy Suit and this petition involve essentially the same parties, namely the Petitioner and Respondents;

 

(c) the documentary evidence adduced in the Conspiracy Suit are similar to the documents exhibited in the affidavits filed in this case;

 

(d) the second limb of the doctrine of res judicata, namely issue estoppel principle, provides that a court’s earlier decision on a certain issue, should bind all parties in respect of that issue in any subsequent action. The Petitioner relies on the following cases –

 

(i) the Supreme Court’s judgment in Asia Commercial Finance (M) Bhd lwn Kawal Teliti Sdn Bhd [1995] 3 MLJ 189;

 

(ii) the Federal Court case of Tara Rajaratnam v Datuk Jaginder

 

Singh & Ors [1981] 1 MLJ 232;

 

(iii) the Supreme Court’s decision in Scotch Leasing Sdn Bhd v Chee Pok Choy [1997] 2 CLJ 58; and

 

(iv) the Federal Court’s judgment in Serac Asia Sdn Bhd v Sepakat Insurance Brokers Sdn Bhd [2013] 6 CLJ 673; and

 

(e) if this court is not bound by all the Findings in Conspiracy Suit, there is a possibility that despite the similarity of issues, documentary evidence and parties in the Conspiracy Suit and this case, this court

 

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may make findings in this petition which are different from the Findings in Conspiracy Suit.

 

36. The Respondents’ learned counsel, Ms. Fiona Bodipalar (Ms. Fiona) contended that this court is not bound by the Findings in Conspiracy Suit for the following reasons:

 

(a) this suit has been filed by the Petitioner after the institution of the Conspiracy Suit. In this case, the Petitioner has raised certain issues which have also been litigated in the Conspiracy Suit. The Respondents are constrained to defend this suit in respect of the same issues which have already been decided in the Conspiracy Suit. Such a fact distinguishes Asia Commercial Finance (M) Bhd, Scotch Leasing Sdn Bhd and Serac Asia Sdn Bhd which concern applications to set aside earlier decisions based on the same issues which have been previously decided. It is to be noted that an appeal has been lodged to the Court of Appeal against NCC 4 Court’s decision in the Conspiracy Suit (Respondents’ Appeal). The Respondents’ Appeal is still pending;

 

(b) this petition constitutes a fresh cause of action under s 181 CA wherein the Petitioner is asking this court to consider a set of facts (some of which overlap with the facts considered in the Conspiracy Suit). Accordingly, this court should not be bound in this new suit by the Findings in Conspiracy Suit; and

 

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(c) a High Court judge is not bound by another High Court judge’s decision as explained in the following cases –

 

(i) Ong Hock Thye FJ’s (as he then was) judgment in the Federal Court case of Sundralingam v Ramanathan Chettiar [1967] 2 MLJ 211;

 

(ii) the High Court case of Theow Say Kow @ Teoh Kiang Seng, Henry v Teoh Kiang Hong [2014] 9 MLJ 32;

 

(iii) the High Court’s judgment in PN Mohamed Ibrahim v Yap Chin Hock [1954] 1 MLJ 127; and

 

(iv) the English Divisional Court’s decision in Huddersfield Police Authority v Watson [1947] 2 All ER 193.

 

37. I am of the respectful view that I am not be bound by the Findings in Conspiracy Suit. My reasons are as follows:

 

(a) there is no earlier suit which has sought relief under s 181 CA as in this petition. This petition is clearly different from the Conspiracy Suit in respect of the cause of action and relief. The Conspiracy Suit is based on, among others, breaches of fiduciary duties and the tort of conspiracy. This petition is solely based on statute, namely s 181 CA. There may be overlapping issues of fact and law in the Conspiracy Suit and this case but such overlapping issues do not mean or render

 

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these 2 cases to be the same matters in terms of cause of action and relief. As this petition is different from the Conspiracy Suit, this court is duty bound as a court of first instance to make findings of fact and law based on the evidence adduced in this case, on whether the Petitioner has proven a case under s 181 CA on a balance of probabilities. If I am bound by the Findings in Conspiracy Suit, this is tantamount to an abdication of my judicial function in deciding this petition;

 

(b) the doctrine of res judicata with its 2 limbs (cause of action estoppel and issue estoppel), is not a mandatory statutory provision intended by Parliament to be applicable in all circumstances. In my view, res judicata doctrine is based on case law and should not be applied indiscriminately so as to cause injustice. I rely on the following 2 Court of Appeal cases –

 

(i) in Chee Pok Choy & Ors v Scotch Leasing Sdn Bhd [2001] 4 MLJ 346, at 356, 357 and 358, Gopal Sri Ram JCA (as he then was) held as follows –

 

“Now, res judicata is not merely a technical rule of pleading. It is a doctrine of substantial justice. It is a process whereby justice is achieved procedurally by precluding a party from reagitating in subsequent proceedings a complaint or an issue that has, or could fairly have been disposed in earlier proceedings between the same parties or their privies. It is merely equity in action in the procedural arena.

 

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The doctrine may thus be seen to encompass several categories. In its narrowest sense, res judicata, I think, refers to estoppel by record. It refers to the actual decision of the earlier action or proceeding. In its wider sense, it encompasses issues and causes of action that could justly and fairly have been equally adjudicated in the earlier suit or proceeding. This wider operation of the doctrine is sometimes referred to ‘constructive res judicata’. It houses the twin concepts of issue estoppel and cause of action estoppel. Like the tree of which they form the branches, they are designed to ensure that there is finality in litigation.

 

Now, there is a dimension to the doctrine of res judicata that is not always appreciated. It is this. Since the doctrine (whether in its narrow or broader sense) is designed to achieve justice, a court may decline to apply it where to do so would lead to an unjust result. And there is respectable authority in support of the view I have just expressed.

 

On the authorities discussed thus far, the principle comes to this. Whether res judicata in the wider sense should be permitted to bar a claim is a matter that is to be determined on the facts of each case, always having regard to where the justice of the individual and particular case lies/’

 

(emphasis added); and

 

(ii) in Francis Joseph Puthucheary v Eng Securities Sdn Bhd

 

[2015] AMEJ 663, at paragraphs 28 and 29, Idrus Harun JCA decided as follows –

 

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“[28] The decision of the Deputy Registrar would

 

not in our judgment attract the application of the principle of res judicata. While we are consciously aware that the doctrine of res judicata is not odious, the extension of the doctrine will undeniably accentuate further its importance in judicial determination of a cause of action. The essential point we would like to make here is that in law, there is a dimension to the doctrine of res judicata countenanced in the authorities which we ought to consider. Justice Gopal Sri Ram JCA in Chee Pok Choy v Scotch Leasing Sdn Bhd [2001] 4 MLJ 346 described this dimension as follows:

 

“Since the doctrine (whether in its narrow or broader sense) is designed to achieve justice, a court may decline to apply it where to do so would lead to an unjust result. And there is a respectable authority in support of the view I have just expressed.

 

In Carl-Zeiss Stiftung v Rayner and Keeler & Ors (No.2) [1966] 2 AII ER 532 at p 573, Lord Upjohn said:

 

As my noble and learned friend, Lord Reid, has already pointed out there may be many reasons why a litigant in the earlier litigation has not pressed or may even for good reasons have abandoned a particular issue. It may be most unjust to hold him

 

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precluded from raising that issue in

 

subsequent litigation (and see Lord

 

Maugham LC’s

 

observations in the New Brunswick’s case [1938] 4 AII ER 747 at p 755; [1939] Ac 1 at p 21). All estoppels are not odious but must be applied so as to work justice and not injustice, and I think that the principle of issue estoppel must be applied to

 

the circumstances of the subsequent case with this overriding consideration in mind’.

 

[29] Thus, adopting the above principle, we shall consider whether justice of the present appeal demands that we should decline to apply the principle of res judicata”

 

(emphasis added).

 

As explained in Chee Pok Choy and Francis Joseph Puthucheary,

 

res judicata doctrine should not be applied in a case if its application may lead to an injustice. If issue estoppel principle is applied in this petition, this may cause an injustice because I will be “mechanically’ bound by all Findings in Conspiracy Suit. Consequently, I cannot make a judicial evaluation of evidence adduced in this case in respect of issues which are similar to those which have been decided in Conspiracy Suit; and

 

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(c) from the view point of stare decisis, the High Court is not bound by a

 

previous High Court’s judgment – Sundralingam.

 

38. The following cases cited by the Petitioner, with respect, do not support the application of issue estoppel principle in this case:

 

(a) in Asia Commercial Finance (M) Bhd –

 

(i) the appellant finance company had granted fixed loan facility and end-finance facility to the respondent company. The repayment of such banking facilities was secured by, among others, the registration of a charge under the National Land Code (NLC) over the respondent company’s land in the appellant company’s favour (Charged Land);

 

(ii) on 12.11.1987 the appellant company obtained from the Land Administrator an order for sale of the Charged Land under the NLC (Sale Order dated 12.11.1987);

 

(iii) the respondent company filed a suit on 22.1.1988 in the High Court to, among others, set aside the Sale Order dated 12.11.1987 and to claim for damages from the appellant company (1st Suit). The 1st Suit was dismissed by the High Court and this decision was upheld on appeal by the Supreme Court;

 

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(iv) the respondent company filed a second action in the High Court to claim for, among others, damages in the form of loss of profit which the respondent company would have obtained from housing development if the appellant company had disbursed completely the banking facilities (2nd Suit); and

 

(v) the appellant company applied unsuccessfully to the High Court to strike out the 2nd Suit. However this High Court’s decision was reversed on appeal to the Supreme Court. The Supreme Court struck out the 2nd Suit on the ground that the respondent company was barred by the first limb of res judicata doctrine (cause of action estoppel) from claiming for damages in the 2nd Suit based on the same facts and issues which had been raised and finally determined against the respondent company in the 1st Suit.

 

The material facts in Asia Commercial Finance (M) Bhd clearly showed 2 similar suits filed by the same plaintiff to claim for the same remedy of damages from the same defendant based on the same issue. Hence, the application of the first limb of res judicata doctrine (cause of action estoppel) in Asia Commercial Finance (M) Bhd. As explained above, this petition under s 181 CA is different from the Conspiracy Suit;

 

(b) in Tara Rajaratnam –

 

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(i) in 1977 the appellant filed a suit in the High Court against the respondents and applied for, among others, a declaration that the transfer of the appellant’s land had been caused by the respondents’ fraud;

 

(ii) the respondents filed various applications to struck out the appellant’s suit. On 19.3.1979, the High Court struck out “all the paragraphs” of the appellant’s statement of claim with liberty to the appellant to “file a fresh suit;

 

(iii) on 10.9.1979, the appellant instituted a second suit against the same respondents. The respondents applied to strike out the second suit on the ground of res judicata; and

 

(iv) the High Court struck out the second suit on the ground of res judicata but this decision was reversed by the Federal Court. In Tara Rajaratnam, at p. 234, Wan Suleiman FJ (as he then was) decided as follows –

 

“We are of the view that the two orders in granting the appellant liberty to file a fresh action can only mean that no final decision has been pronounced so as to estop the appellant “in any subsequent litigation from disputing or questioning such decision on the merits”, so that the plea of res judicata must fail”

 

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(emphasis added).

 

It is clear that there is no room to apply res judicata doctrine in Tara

 

Rajaratnam;

 

(c) in Serac Asia Sdn Bhd –

 

(i) the appellant company obtained a judgment in default of appearance against the respondent insurance broker company. The default judgment ordered an assessment of damages to be paid by the respondent company;

 

(ii) the respondent company applied unsuccessfully to the High Court’s Deputy Registrar to set aside the default judgment. The respondent company’s subsequent appeal to the High Court judge to set aside the default judgment, was dismissed. The Court of Appeal also dismissed the respondent company’s appeal and remitted the matter back to the High Court to assess damages payable by the respondent company. The respondent company’s application to the Federal Court for leave to appeal against the Court of Appeal’s decision, was not successful;

 

(iii) the respondent company subsequently filed an application in the High Court to strike out the suit based on fraud and the appellant company’s lack of locus standi to file the suit. The High Court allowed the respondent company’s application and struck out the

 

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suit. This decision was affirmed by the Court of Appeal (Court of Appeal’s 2nd Decision); and

 

(iv) the appellant company obtained leave of the Federal Court to appeal against the Court of Appeal’s 2nd Decision. The Federal Court reversed the Court of Appeal’s 2nd Decision on, among others, the ground that since the default judgment had been perfected, the High Court was functus officio and could not strike out the suit.

 

Serac Asia Sdn Bhd did not concern the application of the res judicata doctrine; and

 

(d) the Supreme Court’s decision in Scotch Leasing Sdn Bhd has been overruled by the Federal Court in Badiaddin bin Mohd Mahidin & Anor v Arab Malaysian Finance Bhd [1998] 2 CLJ 75, In Badiaddin, at p. 115-116 and 117, Gopal Sri Ram JCA (as he then was) decided as follows –

 

“I must pause now to mention the decision of the Supreme Court in Scotch Leasing Sdn. Bhd. v. Chee Pok Choy & Ors

 

[1997] 2 MLJ 105. In that case, the respondent, the registered proprietor of land held under Land Office title, created a charge over it in the appellant’s favour. The appellant commenced proceedings by originating summons in the High Court for an order for sale of the land in question. The High Court heard the summons inter partes and granted the appellant an order for

 

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sale. That order was perfected. Now, ss. 260 to 263 of the National Land Code 1965 confer exclusive jurisdiction upon a Land Administrator to make an order for sale of any land held under Land Office title. So, in truth, the High Court had no jurisdiction to make the order in question. The respondent did not, however, take the point during the hearing of the appellant’s summons. Some nine months later, the respondent applied to set aside the order for sale on the ground that the High Court plainly lacked jurisdiction. The judge agreed with jurisdictional argument and set aside his earlier order. On appeal, the Supreme Court reversed his decision, observing, inter alia, as follows (at p. 110):

 

I am, with respect, unable to agree with this observation since it conflicts with well-settled principles enunciated in the two Privy Council cases earlier cited. It is therefore my very respectful view that the decision in Scotch Leasing is wrong.”

 

(emphasis added).

 

39. Before the conclusion of cross-examination of the 3rd Respondent, to “mitigate” the possibility of conflicting findings in the Conspiracy Suit and this petition, I proposed to learned counsel for all parties that the Respondents’ Appeal should be heard together with the Respondents’ appeal against this decision. Such a proposal has been accepted by all parties in this case.

 

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40. The possibility of conflicting findings made by different courts in the Conspiracy Suit and this petition, could have been avoided if all the parties in this case had proceeded in Court Enc. 8 to apply for either one of the following orders under Order 4 rule 1(1) of the Rules of Court 2012 (RC) –

 

(b) a consolidation of the Conspiracy Suit with this petition; or (b) a joint hearing of the Conspiracy Suit and this suit.

 

If there are similar issues in 2 or more pending cases, it is my hope that parties should resort to Order 4 rule 1(1) RC so as to avoid the possibility of different court findings in respect of similar issues.

 

I. Sections 16(6) and 181 CA

 

41. Sections 16(6) and 181 CA provide as follows:

 

“ Members of company

 

16(6) The subscribers to the memorandum shall be deemed to have agreed to become members of the company and on the incorporation of the company shall be entered as members in its register of members, and every other person who agrees to become a member of a company and whose name is entered in its register of members shall be a member of the company.

 

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Remedy in cases of an oppression

 

181(1) Any member or holder of a debenture of a company or,

 

in the case of a declared company under Part IX, the Minister, may apply to the Court for an order under this section on the ground –

 

(a) that the affairs of the company are being conducted or the powers of the directors are being exercised in a manner oppressive to one or more of the members or holders of debentures including himself or in disregard of his or their interests as members, shareholders or holders of debentures of the company; or

 

(b) that some act of the company has been done or is threatened or that some resolution of the members, holders of debentures or any class of them has been passed or is proposed which unfairly discriminates against or is otherwise prejudicial to one or more of the members or holders of debentures (including himself).

 

(2) If on such application the Court is of the opinion

 

that either of those grounds is established the Court may, with the view to bringing to an end or remedying the matters complained of, make such order as it thinks fit and without prejudice to the generality of the foregoing the order may –

 

(a) direct or prohibit any act or cancel or vary any transaction or resolution;

 

(b) regulate the conduct of the affairs of the company in future;

 

(c) provide for the purchase of the shares or debentures of the company by other members or holders of debentures of the company or by the company itself;

 

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(d) in the case of a purchase of shares by the company provide for a reduction accordingly of the company’s capital; or

 

(e) provide that the company be wound up.

 

(3) Where an order that the company be wound up

 

is made pursuant to paragraph (2)(e) the provisions of this Act relating to winding up of a company shall, with such adaptations as are necessary, apply as if the order had been made upon a petition duly presented to the Court by the company.

 

(4) Where an order under this section makes any

 

alteration in or addition to any company’s memorandum or articles, then, notwithstanding anything in any other provision of this Act, but subject to the order, the company concerned shall not have power without the leave of the Court to make any further alteration in or addition to the memorandum or articles inconsistent with the order; but subject to the foregoing provisions of this subsection the alterations or additions made by the order shall be of the same effect as if duly made by resolution of the company.

 

(5) An office copy of any order made under this section

 

shall be lodged by the applicant with the Registrar within fourteen days after the making of the order.

 

Penalty: One thousand ringgit. Default penalty.”

 

(emphasis added).

 

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J. Section 216 of Singapore’s Companies Act (SCA)

 

42. Section 181 is substantially similar (not identical) to s 216 SCA. Section 216 SCA reads as follows:

 

“Personal remedies in cases of oppression or injustice

 

216(1) Any member or holder of a debenture of a company or, in

 

the case of a declared company under Part IX, the Minister may apply to the Court for an order under this section on the ground –

 

(a) that the affairs of the company are being conducted or the powers of the directors are being exercised in a manner oppressive to one or more of the members or holders of debentures including himself or in disregard of his or their interests as members, shareholders or holders of debentures of the company; or

 

(b) that some act of the company has been done or is threatened or that some resolution of the members, holders of debentures or any class of them has been passed or is proposed which unfairly discriminates against or is otherwise prejudicial to one or more of the members or holders of debentures (including himself).

 

(2) If on such application the Court is of the opinion that

 

either of such grounds is established the Court may, with a view to bringing to an end or remedying the matters complained of, make such order as it thinks fit and, without prejudice to the generality of the foregoing, the order may –

 

(a) direct or prohibit any act or cancel or vary any transaction or resolution;

 

(b) regulate the conduct of the affairs of the company in future;

 

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(c) authorise civil proceedings to be brought in the name of or on behalf of the company by such person or persons and on such terms as the Court may direct;

 

(d) provide for the purchase of the shares or debentures of the company by other members or holders of debentures of the company or by the company itself;

 

(e) in the case of a purchase of shares by the company provide for a reduction accordingly of the company’s capital; or

 

(f) provide that the company be wound up.

 

(3) Where an order that the company be wound up is made pursuant to subsection (2)(f), the provisions of this Act relating to winding up of a company shall, with such adaptations as are necessary, apply as if the order had been made upon an application duly made to the Court by the company.

 

(4) Where an order under this section makes any alteration in or addition to any company’s memorandum or articles, then, notwithstanding anything in any other provision of this Act, but subject to the provisions of the order, the company concerned shall not have power, without the leave of the Court, to make any further alteration in or addition to the memorandum or articles inconsistent with the provisions of the order; but subject to the foregoing provisions of this subsection the alterations or additions made by the order shall be of the same effect as if duly made by resolution of the company.

 

(5) A copy of any order made under this section shall be lodged by the applicant with the Registrar within 14 days after the making of the order.

 

(6) Any person who fails to comply with subsection (5) shall be guilty of an offence and shall be liable on conviction to a fine not exceeding $1,000 and also to a default penalty.

 

(7) This section shall apply to a person who is not a member of a company but to whom shares in the company have

 

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been transmitted by operation of law as it applies to members of a company; and references to a member or members shall be construed accordingly.”

 

43. As our s 181 CA is substantially similar to s 216 SCA, Singapore cases on s 216 SCA are highly persuasive. I will refer to Singapore cases subsequently in this judgment.

 

K. English statutory provisions on “oppression”

 

44. Section 210 of the United Kingdom’s Companies Act 1948 [UK CA (1948)] provides as follows:

 

“210 Alternative remedy to winding up in cases of oppression

 

(1) Any member of a company who complains that the affairs

 

of the company are being conducted in a manner oppressive to some part of the members (including himself) or, in a case falling within subsection (3) of section one hundred and sixty-nine of this Act, the Board of Trade, may make an application to the court by petition for an order under this section.

 

(2) If on any such petition the court is of opinion –

 

(a) that the company’s affairs are being conducted as aforesaid; and

 

(b) that to wind up the company would unfairly prejudice that part of the members, but otherwise the facts would justify the making of a winding-up order on the ground that it was just and equitable that the company should be wound up;

 

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the court may, with a view to bringing to an end the matters complained of, make such order as it thinks fit, whether for regulating the conduct of the company’s affairs in future, or for the purchase of the shares of any members of the company by other members of the company or by the company and, in the case of a purchase by the company, for the reduction accordingly of the company’s capital, or otherwise.

 

(3) Where an order under this section makes any alteration

 

in or addition to any company’s memorandum or articles, then, notwithstanding anything in any other provision of this Act but subject to the provisions of the order, the company concerned shall not have power without the leave of the court to make any further alteration in or addition to the memorandum or articles inconsistent with the provisions of the order; but, subject to the foregoing provisions of this subsection, the alterations or additions made by the order shall be of the same effect as if duly made by resolution of the company and the provisions of this Act shall apply to the memorandum or articles as so altered or added to accordingly.

 

(4) An office copy of any order under this section altering or

 

adding to, or giving leave to alter or add to, a company’s memorandum or articles shall, within fourteen days after the making thereof, be delivered by the company to the registrar of companies for registration; and if a company makes default in complying with this subsection, the company and every officer of the company who is in default shall be liable to a default fine.

 

(5) In relation to a petition under this section, section three

 

hundred and sixty-five of this Act shall apply as it applies in relation to a winding-up petition, and proceedings under this section shall, for the purposes of Part V of the Economy (Miscellaneous Provisions) Act, 1926, be deemed to be proceedings under this Act in relation to the winding up of companies.”

 

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45. It is clear that our s 181 CA differs materially from s 210 UK CA (1948) as explained in the following cases:

 

(a) the Privy Council’s decision delivered by Lord Wilberforce in an appeal from Malaysia, Re Kong Thai Sawmill (Miri) Sdn Bhd; Kong Thai Sawmill (Miri) Sdn Bhd & Ors v Ling Beng Sung [1978] 2 MLJ 227, at 228-229; and

 

(b) the Federal Court’s judgment given by Raus Sharif PCA in Jet-Tech Materials Sdn Bhd & Anor v Yushiro Chemical Industry Co Ltd & Ors & Another Appeal [2013] 2 CLJ 277, at 296-297.

 

46. Sections 459 and 461 of the United Kingdom’s Companies Act 1985 [UK CA (1985)] state as follows:

 

“459(1) A member of a company may apply to the court by

 

petition for an order under this Part on the ground that the company’s affairs are being or have been conducted in a manner which is unfairly prejudicial to the interests of some part of the members (including at least himself) or that any actual or proposed act or omission of the company (including an act or omission on its behalf) is or would be so prejudicial.

 

(2) The provisions of this Part apply to a person who is not a

 

member of a company but to whom shares in the company have been transferred or transmitted by operation of law, as those provisions apply to a member

 

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of the company ; and references to a member or members are to be construed accordingly.

 

461(1) If the court is satisfied that a petition under this Part is well founded, it may make such order as it thinks fit for giving relief in respect of the matters complained of.

 

(2) Without prejudice to the generality of subsection (1), the

 

court’s order may –

 

(a) regulate the conduct of the company’s affairs in the future,

 

(b) require the company to refrain from doing or continuing an act complained of by the petitioner or to do an act which the petitioner has complained it has omitted to do,

 

(c) authorise civil proceedings to be brought in the name and on behalf of the company by such person or persons and on such terms as the court may direct,

 

(d) provide for the purchase of the shares of any members of the company by other members or by the company itself and, in the case of a purchase by the company itself, the reduction of the company’s capital accordingly.

 

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(3) If an order under this Part requires the company not to make any, or any specified, alteration in the memorandum or articles, the company does not then have power without leave of the court to make any such alteration in breach of that requirement.

 

(4) Any alteration in the company’s memorandum or articles made by virtue of an order under this Part is of the same effect as if duly made by resolution of the company, and the provisions of this Act apply to the memorandum or articles as so altered accordingly.

 

(5) An office copy of an order under this Part altering, or giving leave to alter, a company’s memorandum or articles shall, within 14 days from the making of the order or such longer period as the court may allow, be delivered by the company to the registrar of companies for registration; and if a company makes default in complying with this subsection, the company and every officer of it who is in default is liable to a fine and, for continued contravention, to a daily default fine.

 

(6) Section 663 (winding-up rules) applies in relation to a petition under this Part as in relation to a winding-up petition.”

 

47. A comparison between our s 181(1) CA and s 459(1) UK CA (1985) shows that our s 181(1) CA is much wider than s 459(1) UK CA (1985). Section 181(1)(a) and (b) CA provide for the following 4 categories of acts

 

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or omission which may be a ground for the court to grant relief under s 181(2) CA:

 

(a) oppression of the plaintiff as a member of the company;

 

(b) disregard of the plaintiff’s interest as the company’s shareholder;

 

(c) unfair discrimination of the plaintiff in the plaintiff’s capacity as a member of the company; and

 

(d) prejudice to the plaintiff as a shareholder of the company (4 Categories).

 

The 4 Categories have been recognized in a Federal Court judgment

 

delivered by Richard Malanjum CJ (Sabah & Sarawak) in PanPacific Construction Holdings Sdn Bhd v Ngiu-Kee Corporation

 

(M) Bhd & Anor [2010] 6 CLJ 721, at 734-735.

 

48. At the beginning of this judgment, I was reluctant to describe a suit pursuant to s 181 CA as an “oppression” suit. This is because “oppression” only constitutes 1 of the 4 Categories. The shoulder note to s 181 CA is similarly confusing as it states only “oppression”. The shoulder note to s 216 SCA is more accurate in describing s 216 SCA as providing for “personal remedies in cases of oppression or injustice”.

 

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Section 459(1) UK CA (1985) only provides for “unfair prejudice” to the plaintiff. Accordingly, the scope of s 181 CA is much wider than that provided in s 459(1) UK CA (1985)

 

49. Despite the above differences between our s 181 CA and s 459(1) UK CA (1985), our Federal Court in the following cases have applied Lord Hoffmann’s judgment in the House of Lords’ case of O’Neill and another v Phillips and others [1999] 2 All ER 961 and the English Court of Appeal case of Re Saul D Harrison & Sons plc [1995] 1 BCLC 14 [delivered by Hoffmann (as he then was) and Neill LJJ] in the interpretation of s 181 CA:

 

(a) Pan-Pacific Construction Holdings Sdn Bhd, at p. 735; and

 

(b) Mohd. Apandi Ali FCJ’s decision in Looh Siong Chee v Numix Engineering Sdn Bhd & Ors [2015] MLJU 252, at paragraphs 2, 2628 and 33-34.

 

50. The present ss 994 and 996 of the United Kingdom’s Companies Act 2006 [UK CA (2006)] read as follows:

 

“Petition by company member

 

994(1) A member of a company may apply to the court by petition for an order under this Part on the ground –

 

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(a) that the company’s affairs are being or have been conducted in a manner that is unfairly prejudicial to the interests of members generally or of some part of its members (including at least himself), or

 

(b) that an actual or proposed act or omission of the company (including an act or omission on its behalf) is or would be so prejudicial.

 

(2) The provisions of this Part apply to a person who is not a

 

member of a company but to whom shares in the company have been transferred or transmitted by operation of law as they apply to a member of a company.

 

(3) In this section, and so far as applicable for the purposes

 

of this section in the other provisions of this Part, “company” means –

 

(a) a company within the meaning of this Act, or

 

(b) a company that is not such a company but is a statutory water company within the meaning of the Statutory Water Companies Act 1991 (c. 58).

 

Powers of the court under this Part

 

996(1) If the court is satisfied that a petition under this Part is well founded, it may make such order as it thinks fit for giving relief in respect of the matters complained of.

 

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(2)

 

Without prejudice to the generality of subsection (1), the court’s order may –

 

(a) regulate the conduct of the company’s affairs in the future;

 

(b) require the company –

 

(i) to refrain from doing or continuing an act complained of, or

 

(ii) to do an act that the petitioner has complained it has omitted to do;

 

(c) authorise civil proceedings to be brought in the name and on behalf of the company by such person or persons and on such terms as the court may direct;

 

(d) require the company not to make any, or any specified, alterations in its articles without the leave of the court;

 

(e) provide for the purchase of the shares of any members of the company by other members or by the company itself and, in the case of a purchase by the company itself, the reduction of the company’s capital accordingly ”

 

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51. Section 994(1) UK CA (2006) concerns only “unfairprejudice” and seems to me to be narrower than the 4 Categories provided in s 181(1)(a) and (b) CA. In Koh Jui Hiong & Ors v Ki Tak Sang & Another Appeal [2014] 2 CLJ 401, at 418-419, Jeffrey Tan FCJ in the Federal Court has held that in applying s 181 CA, Malaysian courts are “not necessarily bound’ by decisions based on s 210 UK CA 1948, s 459 UK CA 1985 and s 996 UK CA 2006 (I think the Federal Court has also in mind s 994 UK CA 2006).

 

L. Scope of Section 181 Action

 

52. Based on my understanding of Malaysian cases on s 181 CA, the following three matters need to be considered in a Section 181 Action:

 

(a) whether the plaintiff (Order 88 rule 2 RC provides that a Section 181 Action shall be filed by way of an originating summons and no longer by way of a petition) has the locus standi to file a Section 181 Action (Locus Standi Question)?;

 

(b) if the Locus Standi Question is resolved in favour of the plaintiff, has the plaintiff proven on a balance of probabilities the existence of circumstances as alleged by the plaintiff within the meaning of s 181(1)(a) and/or (b) CA?; and

 

(c) if the plaintiff has established the existence of circumstances under s 181(1)(a) and/or (b) CA, whether the court should grant relief and if “yes”, what is the appropriate relief to be granted by the court?

 

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L1. Locus Standi Question

 

53. A plaintiff can only file a Section 181 Action if the plaintiff is a “member’ of the defendant company within the meaning of s 16(6) CA, namely the plaintiff’s name appears in the defendant company’s register of members. This is clear from, among others, the following Federal Court cases:

 

(a) Abdoolcader J’s (as he then was) judgment in Yeng Hing Enterprise Sdn Bhd v Liow Su Fah [1979] 2 MLJ 240, at 243-244;

 

(b) Jet-Tech Materials Sdn Bhd, at p. 289; and

 

(c) Koh Jui Hiong, at p. 413.

 

54. There is an exception wherein a plaintiff who is not a member of the defendant company within the meaning of s 16(6) CA but the defendant company and the other co-defendant in question are estopped from denying that the plaintiff can commence the Section 181 Action. This equitable estoppel exception is laid down in the Federal Court’s judgment given by Gopal Sri Ram JCA (as he then was) in Owen Sim Liang Khui v Piasau Jaya Sdn Bhd & Anor [1996] 4 CLJ 716, at 741-743, as follows –

 

“Section 181 opens with the words: “Any member”. There then follows a recital of the other persons who are declared to be entitled

 

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to move the Court under the section. The expression “member” is not defined in s. 4 [CA]. However, the meaning of that term is to be found in s. 16(6) [CA] …

 

A reading of s. 181 reveals that in the latter part of para. (a) of subs. (1) to that section the Legislature has used the expression “members, shareholders … of the company”. However, it does not require much intellectual exercise to realise that the sub-section, read as a whole, when using the terms “member” and “shareholder”, refers to the same category of persons within the company. The result, therefore, is that, as a general rule, only one who comes within the terms of s. 16(6) of the Act may present a petition under s. 181. Put another way, in general, a petitioner who applies under the section must be able to demonstrate that his name appears on a company’s register of members at the date of presentation of the petition: if he is unable to do so, then he has no standing to invoke the jurisdiction conferred upon the Court by the section. In this respect, the section differs materially from s. 459 of the Companies Act 1985 of the United Kingdom, for under the latter provision past members have been expressly given locus standi to apply for relief under it.

 

We have, in stating the applicable rule as to standing under s. 181 taken great care in emphasising that what has been expressed is the general rule and not a universal rule. We have done so to bring home the point that there may be cases where an application of the general rule would be unfair or unjust.

 

Take, for instance, the case of a person who has agreed to become a member, but whose name has been omitted from the register of members. If it transpires that prior to the dispute leading to the presentation of the petition, a company or its board had always treated the complainant as a member, it would not be open to them to assert that the petitioner lacked locus standi. Examples may be multiplied without any principle emerging from them. Take the facts of this very case. Here we have a fact pattern where the

 

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appellant’s membership of the company had been terminated in circumstances which are being challenged by him on substantial grounds. The substantial ground he complains of is the deprivation of his membership in the Company. He says that the circumstances attending this deprivation of membership falls within the framework of s. 181(1)(a) and (b). It is the company, acting through its board, that had deprived the appellant of the status of a member. Can the company be now heard to say that the appellant is no longer a member and is therefore disentitled from moving the Court under s. 181 [CA] and from questioning that very deprivation in proceedings brought under the section? We think not. For it does not lie in the mouth of the alleged wrongdoers to say that the appellant has no ground to stand on after having cut the very ground from under his feet. The true principle which governs such cases as the present is housed in the doctrine of estoppel. The doctrine has reached a stage where it may be applied to prevent or preclude a litigant from raising the provisions of a statute in answer to a claim made against him in circumstances where it would be unjust or inequitable to permit him so to do.

 

The equitable jurisdiction by which a personal bar is placed upon a litigant from raising or relying upon the provisions of a statute is also contained in the maxim “equity will not permit statute to be used as an engine of fraud.”

 

It may therefore be quite safely stated that if facts emerge from which it may be determined that it is unjust or inequitable to permit a respondent to a petition under s. 181 to assert or to contend that a petitioner has no locus standi to move the Court, then, he will be estopped from so asserting. Stated in another fashion, a respondent who is guilty of unconscionable or inequitable conduct will not be permitted to raise or rely upon the requirement of membership in order to defeat a petitioner’s standing as this would amount to his using statute as an engine of fraud. It does not matter how the proposition is formulated so long it has the effect adverted to.

 

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We have earlier made our observations upon the conduct of the Company which by its own action had deprived the petitioner of membership and had then asserted his lack of standing to move a petition under s. 181. This conduct does not, in our judgment, entitle the company (for it was the one who raised the issue) from asserting that the appellant lacks standing to present the petition. It matters not that it is the petitioner who relies upon the estoppel. For the true nature of the doctrine is not that it may not be used to found a cause of action, but that it may be invoked to prevent the respondents from asserting the existence or non-existence of facts, the existence or nonexistence of which would destroy a cause of action.”

 

(emphasis added).

 

55. In Koh Jui Hiong, at p. 413-415, the Federal Court held that the legal standing to file a Section 181 Action has been “widened’ by Owen Sim.

 

56. Owen Sim has been followed by the Singapore Court of Appeal in Kitnasamy s/o Marudapan v Nagatheran s/o Manogar & Anor

 

[2000] 2 SLR 598. In Kitnasamy, at paragraphs 25-27, Chao Hick Tin JA decided as follows –

 

The question of “member”

 

25. Under s 216 of the [Companies Act of Singapore], only a member or a holder of a debenture of a

 

company is entitled to seek relief. A registered shareholder is a

 

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member. Thus, it is essential for this purpose that a shareholder’s name should be on the register. As mentioned above, a Registry of Companies search done on 11 January 2000 did not show that the appellant was a registered shareholder of the company. But that is not conclusive. The appellant alleged that according to the company’s auditor, the appellant was a registered shareholder and the Registry of Companies’ records would be updated after the annual returns were filed. There was, therefore, some evidence that he was the registered shareholder.

 

26. In Owen Sim Liang Khui v Piasau Jaya Sdn Bhd & Anor (supra), the Malaysian Federal Court held that under certain circumstances, it would be possible for a person whose name was not on the register of members to petition under s 181 of the Companies Act 1965 (the Malaysian equivalent of our s 216). The basis of this was an estoppel precluding the respondents from

 

raising an objection to the petitioner’s locus standi. In that case, the court held that the requirement that a petitioner under s 181 must be able to demonstrate that his name appears on a company’s register of members at the date of presentation of the petition was only a general, and not a universal, rule. There may be instances where an application of the general rule would be unfair. If it was unjust or inequitable to permit a respondent to a petition under s 181 to assert that a petitioner had no locus standi to move the court, then he would be estopped from so asserting. A respondent who was guilty of

 

unconscionable or inequitable conduct would not be permitted to rely upon the requirement of membership in order to defeat a petitioner’s standing as this would amount to his using the statute as an instrument of fraud. Gopal Sri Ram JCA stated in his judgment at p 134: …

 

27. On the facts as pleaded by the appellant, even if he was not a registered shareholder, it seemed to us that this was

 

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an instance where the appellant had agreed to become a shareholder of the company and had rendered invaluable services to it and due to the default of those responsible for the administration of the company, including the respondents, the appellant’s name as a shareholder was not entered in the register of the company. The belief of the appellant that he was a member was reinforced by the fact that the notice of an EGM scheduled for 14 January 2000, together with a proxy form, were despatched to him. Such documents are only despatched to members. The respondents were thus estopped from asserting that the appellant was not a member ”

 

(emphasis added).

 

L2. Commercial unfairness and “quasi-partnership companies”

 

57. According to my understanding of Malaysian, Singaporean and English cases on this subject –

 

(a) the basic theme of the 4 Categories is “commercial unfairness” (Commercial Unfairness Test). In Pan-Pacific Construction Holdings Sdn Bhd, at p. 735, the Federal Court explained as follows –

 

“[25] Therefore, in order to succeed in its petition pursuant to s 181 the petitioner has to establish and ‘must eminently be determined according to the facts’ of this case that the affairs of the company are being conducted or that the powers of the directors are

 

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being exercised in an oppressive manner or in disregard of its interests, or to its prejudice some unfairly discriminatory or prejudicial act of the company has been done or threatened, or that some resolutions of the members, debenture holders or any class of them has been passed or is proposed to be passed.

 

[26] In other words s 181 permits judicial remedy on four categories of conduct, namely, oppressive conduct, conduct in disregard of interests, unfairly discriminatory conduct or prejudicial conduct.

 

[27] It may also be noted that from the wordings of s 181 its basic theme is ‘unfairness’. However, unfairness ‘does not mean that the court can do whatever the individual judge happens to think fair. The concept of fairness must be applied judicially and the content which it is given by the courts must be based upon rational principles. “The court… has a very wide discretion, but it does no sit under a palm tree”‘. (See:O’Neil v. Philips [1999] 2 All ER 961).”

 

(emphasis added).

 

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(b) the Commercial Unfairness Test adopted in Pan-Pacific Construction Holdings Sdn Bhd, has been affirmed by the Federal Court in Jet-Tech Materials Sdn Bhd, at p. 299;

 

(c) the Singapore Court of Appeal in a judgment given by Chan Sek Keong CJ in Lim Swee Khiang & Anor v Borden Co (Pte) Ltd &

 

Ors [2006] 4 SLR 745, at paragraphs 82, has also affirmed the Commercial Unfairness Test;

 

(d) there is a distinction between “quasi-partnership companies” and companies which are not. Such a distinction is held in Pan-Pacific Construction Holdings Sdn Bhd, at p. 733, 736-737 and 738, as follows –

 

“[19] The five questions posed for consideration by this court are:

 

Question 2:

 

Whether a breach of fiduciary duty committed by one joint-venture partner as against the other partner in operating the affairs or business of a joint-venture company incorporated under the [CA] can constitute conduct proscribed under section 181(1)(a) or (b) [CA]? (Ground 6);

 

[30] The principles of law are therefore quite settled in a non-quasipartnership company. However, where it is (in the nature of quasi-partnership) as in this case

 

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there is an added factor which members are obliged in law to observe, namely, to act in good faith to one another.

 

[31] So, as between the petitioner and the 2nd respondent there existed fiduciary duties between them as in a partnership. In James Birtchnell v. The Equity Trustees, Executors and Agency Co Ltd (1928-30) 42 CLR 384 Dixon J said that the ‘relationship between partners is, of course, fiduciary.’ Thus, they are expected to act in good faith to one another. (See: Mullins v. Laughton [2003] Ch 250; Blisset v. Daniel [1853] 68 ER 1022).

 

[32] And such special relationship between the petitioner and the 2nd respondent entails the application of equitable considerations or constraints as may be derived from the laws of partnership which make it unfair for the 2nd respondent when conducting the affairs of the company to rely on its strict legal powers. Unfairness in this context may be in the form of a breach of the rules or in using the rules in a manner which equity would regard as contrary to good faith as for instance, where ‘the exercise of the power in question would be contrary to what the parties, by words or conduct, have actually agreed’ or ‘exchanged’ (see: O’Neil v. Philips (supra) ) before or after they have entered into association.

 

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[33]

 

Further, it is not ‘necessary that such promises should be independently enforceable as a matter of contract’. (See: O’Neil v. Philips (supra).

 

[34] The above is of course quite a departure from the general principle in company law (‘the majoritarian approach’) that there is no general duty of good faith owed by shareholders in a company to each other. A share is a property which its holder as of right is entitled to utilize it in any manner he may wish. (See: Pender v. Lushington [1877] 6 Ch D 70; Foss v. Harbottle (supra) ). (See also: ‘Fairness and Good Faith as a precept in the Law of Corporations And Other Business Organizations by Charles W Murdock, Vol. 36 Loyola University Chicago Law Journal 551 [2004-2005]’).

 

[35] Accordingly, premised on the agreed fact that the relationship of the petitioner and the 2nd respondent ‘was akin to partners in a joint venture business under the corporate umbrella1 of the company and on the principles of law aforementioned, the petitioner went on to postulate thus: that upon proof of breach or breaches of fiduciary duties resulting in it losing trust and confidence in the 2nd respondent and which in turn destroys the mutual trust and confidence between them, that ‘would and do constitute conduct proscribed under s 181 [CA], being conduct which is oppressive, unfairly disregarding the petitioner’s interest, unfairly discriminatory or unfairly prejudicial’ against it.

 

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[36]

 

With respect, such hypothesis appears to ignore the basic requirements of s 181. Accepting that there might have been breaches of fiduciary duties the question to ask is whether such breaches were unfair to the petitioner. The reason is that in the first place there is no basis to imply from the wordings of the section that mere proof of breach or breaches of fiduciary duties would constitute the conduct proscribed.

 

[42] Premised therefore on the foregoing discourse there is merit in the submission of learned counsel for the respondent when he submitted:

 

(i) that in order for the petitioner to succeed it is not enough to merely ‘raise or establish that there was any breach of any fiduciary duty or duties but must also establish that any such breach (if any) constitutes oppressive conduct, conduct in disregard of interest, unfairly discriminatory conduct or prejudicial conduct’ within the scope of s 181(1)(a) or (b) [CA]; and

 

(ii) that in the final analysis the question whether there is oppression, disregard, unfair discrimination or whether the act complained of is prejudicial is one that must be determined according to the facts of each particular case.

 

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[43] As such, strictly as a matter of law, the above discourse should negate the preposition of law which the petitioner wants this court to accept.

 

[44] For the petitioner to merely declare, without more, as in this case that it has lost its trust and confidence in the 2nd respondent in managing the company due to the latter breaches of its fiduciary duties towards the petitioner, is not a sufficient proof against the 2nd respondent of conduct being oppressive, unfairly disregarding the petitioner’ interests, unfairly discriminatory or unfairly prejudicial against the petitioner for the purpose of s 181.

 

[45] Thus, Question 2 should be answered in the negative

 

which in turn makes Question 1 quite irrelevant in law and need not be specifically answered. (Emphasis added).”

 

(emphasis added);

 

(e) based on Pan-Pacific Construction Holdings Sdn Bhd, if there is evidence that the company in question is a “quasi-partnership company’ –

 

(i) as between the “partners” in a “quasi-partnership company’, there are fiduciary duties owed by each “partner’ to the other “partner’; and

 

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(ii) a breach of a “partner’s” fiduciary duty, does not in itself amount to “commercial unfairness” within the 4 Categories. To substantiate a Section 181 Action, the plaintiff must not only prove a breach of a “partner’s” fiduciary duty but must also prove that such a breach amounts to “commercial unfairness” within any one or more of the 4 Categories;

 

(f) the above unique nature of “quasi-partnership companies” has also been recognised in Singapore in Lim Swee Khiang. For “quasipartnership companies”, a higher standard of corporate governance is required as explained in Lim Swee Khiang, at paragraph 83, as follows –

 

“83. It bears repeating that in a case such as the present where a company has the characteristics of a quasi-partnership and its shareholders have agreed to associate on the basis of mutual trust and confidence, the courts will insist upon a high standard of corporate governance that must be observed by the majority shareholders vis-avis the minority shareholders .”

 

(emphasis added);

 

(g) a plaintiff has to prove the effect of “commercial unfairness” within the 4 Categories, on the plaintiff as a member of the company in question. In Owen Sim, at p. 737, the Federal Court held as follows –

 

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“Now, it is inaccurate to state as a proposition of law that because of the ‘present tense’ of the language appearing in s. 181(1)(a) the oppression complained of must in every case continue right up to the date of the presentation of the petition. Indeed, Lord Wilberforce himself recognised this when he referred to a last minute correction as not having the effect of avoiding an inference of a propensity to oppress. But the reference by his Lordship to a last minute correction is but a mere illustration of a much wider principle. It is this.

 

Section 181(1)(a) is not, as observed by Lord Wilberforce, directed at specific or particular acts or omissions. It is directed at the nature of the conduct complained of. And where attention is called to particular acts or omissions, it is the effect of these which has to be considered. It is not and has never been the law that the section does not bite where what is complained of is but a single act or omission on the part of the wrongdoers. A single act or omission may, by its very nature, have so devastating or far-reaching a consequence upon the rights of a member that its effects may be permanently felt. For the purposes of s. 181(1)(a) it is sufficient that the effects of a single act or omission are such that they persist at the date of the presentation of the petition. It is no answer, in those circumstances, for the perpetrators of the act or omission to allege that there was no continuous oppressive conduct up to the date of presentation of the petition .”

 

(emphasis added); and

 

(h) whether a plaintiff can prove that the plaintiff’s allegations in a Section 181 Action amount to “commercial unfairness” within the 4

 

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Categories, is a question of fact. This is clear from, among others, Pan-Pacific Construction Holdings Sdn Bhd, at p. 738. Accordingly, previous cases regarding the application or nonapplication of s 181 CA, are illustrative and are not binding precedents from the view point of the stare decisis doctrine.

 

L3. Appropriate relief in Section 181 Action

 

58. I am of the following view:

 

(a) if the court finds that there is no evidence of “commercial unfairness” within any of the 4 Categories, the Section 181 Action should be dismissed; and

 

(b) if there is proof of “commercial unfairness” within one or more of the 4 Categories on a balance of probabilities, the court should inform the parties of its finding regarding such “commercial unfairness” (Court’s Finding of Commercial Unfairness). The Court’s Finding of Commercial Unfairness may be given orally and in a summary form. The advantages of such a procedure are as follows –

 

(i) the court has very wide powers under s 181(2)(a) to (e), (3) and (4) CA to grant any relief to bring an end or to remedy the “commercial unfairness” proven in a particular case (Remedy Order). If the parties know the Court’s Finding of Commercial Unfairness, parties are then able to assist the court by submitting

 

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on the Remedy Order (Parties’ Submission On Remedy).

 

Consequently, the court will have the benefit of the Parties’ Submission On Remedy before making the Remedy Order;

 

(ii) there is always a possibility that after the parties have been informed of the Court’s Finding of Commercial Unfairness, parties may consent to the Remedy Order. In Koh Jui Hiong, at p. 411, the appellant and the first to eighth respondents entered into a consent order in the Court of Appeal to set aside a buy-out order made by the High Court; and

 

(iii) from the time of the filing of the Section 181 Action until the Court’s Finding of Commercial Unfairness, there may be a material change in circumstances regarding the company in question (Material Change). The Material Change may have a bearing on the Remedy Order. By giving the Court’s Finding of Commercial Unfairness and by subsequently inviting the Parties’ Submission On Remedy, the court will be given the opportunity to consider the Material Change before making the Remedy Order.

 

59. In view of the above reasons, if the court finds that a plaintiff has proven “commercial unfairness” within one or more of the 4 Categories on a balance of probabilities –

 

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(a) the Court’s Finding of Commercial Unfairness should be informed to the parties, orally or in a written judgment; and

 

(b) the court should not immediately decide on the Remedy Order. Instead, the court should postpone the making of the Remedy Order until after –

 

(i) parties have been given sufficient time to consider agreeing to the Remedy Order; and

 

(ii) if parties cannot consent to the Remedy Order, the Parties’ Submission On Remedy should be filed and the court should only make the Remedy Order after considering the Parties’ Submission On Remedy.

 

60. In this case, the Court’s Finding of Commercial Unfairness was given

 

orally on 3.6.2015. Parties were then given time to –

 

(a) agree to the Remedy Order;

 

(b) file Parties’ Submission On Remedy; and

 

(c) submit orally in respect of the Remedy Order

 

– before the Remedy Order was made on 10.7.2015.

 

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M. Is Petitioner barred from filing this petition because Petitioner is not a member of 2nd Respondent?

 

61. The Respondents’ 1st Affidavit has initially challenged the Petitioner’s right to file this petition under s 181 CA on the ground that the Petitioner is not a member of the 2nd Respondent within the meaning of s 16(6) CA. However, in the Respondents’ third written submission dated 2.6.2015, the Respondents have conceded that the Respondents cannot object to the Petitioner’s locus standi to file this petition as the Petitioner is one of the “ultimate” shareholders of the 2nd Respondent through the 1st Respondent.

 

62. The above concession by Ms. Fiona is rightly made. Notwithstanding the fact that the Petitioner is not a registered shareholder of the 2nd Respondent, based on Owen Sim and Kitnasamy, the Respondents are estopped from denying that the Petitioner can commence this Section 181 Action. The application of equitable estoppel exception in this case is based on the following reasons:

 

(a) for reasons which will be explained later in this judgment, this court finds that the 1st and 2nd Respondents are “quasi-partnership companies” wherein the Petitioner and 3rd Respondent are the only “partners” of the Companies; and

 

(b) in view of the mutual agreement between the Petitioner and 3rd Respondent regarding the restructuring of the Companies and the subsequent management of the 2nd Respondent by the Petitioner as

 

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the 2nd Respondent’s CEO, the Respondents are estopped from denying that the Petitioner has no locus standi to file this petition against the 2nd Respondent.

 

63. Based on the above reasons, the Locus Standi Question in this case must be resolved in favour of the Petitioner.

 

N. Burden and standard of proof

 

64. It is not disputed that the Petitioner bears the legal burden under ss 101(1), (2) and 102 EA to prove on a balance of probabilities that the 10 Grievances constitute “commercial unfairness” within one or more of the 4 Categories in s 181(1)(a) and/or (b) CA.

 

O. Evaluation of evidence in this case

 

65. In view of the acute conflict in the evidence adduced by the parties in this case, I will resolve such a conflict based on one or more of the following reasons:

 

(a) whether there is contemporaneous documentary evidence to support or contradict the averments made by parties in their affidavits and the oral evidence (the Petitioner and 3rd Respondent have been cross-examined by opposing counsel). Reliance is placed on Siti Norma Yaakob JCA’s (as she then was) judgment in the Court of Appeal case of Guan Teik Sdn Bhd v Hj Mohd Noor Hj Yakob & Ors [2000] 4 CLJ 324, at 330, as follows –

 

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“In cases where conflicting evidence are presented before a court, it is the duty of the court not only to weigh such evidence on a balance of probabilities but it is also encumbent [sic] upon the court to look at all the surrounding factors and to weigh and evaluate contemporaneous documents that may tend to establish the truth or otherwise of a given fact. In this instance the learned trial judge discredited the evidence of the appellant, accepted the evidence of the respondents wholeheartedly and disregarded the contemporaneous documents totally. We say that he had erred as he had failed to direct his mind as to the probative effect of the contemporaneous documents. He should, after accepting the respondents’ evidence, weighed it against the contemporaneous documents and evaluate whether such documents support the respondents’ oral testimony. We say that this evaluation exercise is most crucial for it must be remembered that the respondents were testifying to events that happened eighteen years ago whilst the contemporaneous documents speak of matters then existing at the time such documents, were issued .”

 

(emphasis added).

 

In Jet-Tech Materials Sdn Bhd, at p. 300-301, the Federal Court relied on the lack of contemporaneous documentary evidence to support a finding that the appellants had failed to prove an alleged oral promise;

 

(b) documentary evidence, especially contemporaneous ones, is generally more reliable than oral evidence. In Saminathan v Pappa [1981] 1 MLJ 121, at 126-127, an appeal from Malaysia, the Privy

 

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Council affirmed the Federal Court’s decision in an opinion given by Lord Diplock as follows –

 

“The Federal Court rejected the learned judge’s reasoning on this part of the case. They also considered that despite the conflict of oral evidence the documentary evidence was strong enough to justify them in making their own finding of fact that the purchase price had been paid in full before the transfer and had been paid punctually except as regards a sum of $1,700, part of the second instalment, which was paid three months late. Their Lordships, however, do not find it necessary to canvass the justification for that finding of fact by the Federal Court which the trial judge had refused to make. Miss Pappa’s failure to pay the purchase price in full and punctually, even if proved beyond reasonable doubt, could not in law amount to fraud or entitle the unpaid vendor to defeat the registered proprietor’s title under section 340(2)(a).”

 

(emphasis added);

 

(c) the conduct of the parties is relevant under s 8(2) EA. In Tindok Besar Estate Sdn Bhd v Tinjar Co [1979] 2 MLJ 229, at 234, Chang Min Tat FJ delivered the following judgment in the Federal Court –

 

“For myself, I would with respect feel somewhat safer to refer to and rely on the acts and deeds of a witness which are contemporaneous with the event and to draw the reasonable inferences from them than to believe his subsequent recollection or version of it, particularly if he is a witness with a purpose of his own to serve and if it did not account for the statements in his documents and writings.

 

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(emphasis added);

 

(d) the surrounding circumstances of the case – Guan Teik Sdn Bhd, at p. 330; and

 

(e) the probabilities or improbabilities of the matter in issue, should be considered. In Muniandy & Ors v Public Prosecutor [1966] 1 MLJ 257, at 258, Ong Hock Thye FJ (as he then was) stated in the Federal Court as follows –

 

“In our view, being unshaken in cross-examination is not per se an all-sufficient acid test of credibility. The inherent probability or improbability of a fact in issue must be the prime consideration.”

 

(emphasis added).

 

The above judgment in Muniandy has been followed by the Federal Court in Dr. Shanmuganathan v Periasamy s/o Sithambaram Pillai [1997] 3 MLJ 61, at 82.

 

P. Validity of 2 Trust Deeds

 

66. The Respondents have contended as follows:

 

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(a) the appointment of the 4th Respondent as the Petitioner’s trustee, is a circumvention of a “condition” in the Petronas License requiring Bumiputera shareholding in the 2nd Respondent (Alleged Condition in Petronas License). The court should not sanction the Petitioner’s circumvention of the Alleged Condition in Petronas License. Accordingly, the 2 Trust Deeds are invalid and unenforceable. The Respondents rely on the following cases –

 

(i) Ramly Ali J’s (as he then was) decision in the High Court case of Kondapuram Raghuram v Soo Peng @ Yew Soo Peng [2006] 7 MLJ 510;

 

(ii) the judgment of Lee Swee Seng JC (as he then was) in the High Court case of Norman Disney & Young (suing as a firm) v Afifi bin Haji Hassan [2010] MLJU 543; and

 

(iii) the Singapore Court of Appeal’s judgment delivered by LP Thean J (as he then was) in Suntuso Jacob v Kong Miao Ming [1986] 1 SLR 59;

 

(b) as the 2 Trust Deeds are invalid and unenforceable, the shares in the Companies should remain in the 4th Respondent’s name;

 

(c) the 4th Respondent as a director of the Companies, has fiduciary and statutory duties owed to the Companies to act in the best interest of the Companies. Such fiduciary and statutory duties owed by the 4th

 

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Respondent to the Companies, override the 2 Trust Deeds and any agreement between the Petitioner, 3rd and 4th Respondents; and

 

(d) even if the 2 Trust Deeds are assumed to be valid, the 4th Respondent is still bound under s 132(1E) CA to act in the best interest of the Companies and in the event of conflict between the 4th Respondent’s duty to act in the Companies’ best interest and the 4th Respondent’s duty to the Petitioner, the 4th Respondent shall not subordinate the 4th Respondent’s duty to act in the Companies’ best interest to the 4th Respondent’s duty to the Petitioner.

 

67. With respect, I am not able to accept the Respondents’ above contentions for the following reasons:

 

(a) only the 2nd Respondent has been given the Petronas License (exhibited as “R-34” in the Respondents’ 1st Affidavit). The 1st Trust Deed (1st Respondent) is not affected at all by the Petronas License;

 

(b) I am not able to find the Alleged Condition in Petronas License. The Petronas License dated 25.8.2011, provided as follows –

 

“LESEN MEMBEKALKAN PERALATAN/MEMBERI PERKHDIMATAN KEPADA SYARIKAT-SYARIKAT CARIGALI DAN PENGELUAR MINYAK/GAS DI MALAYSIA

 

Pada menjalankan kuasa-kuasa yang diberi oleh Seksyen 7, Akta Kemajuan Petroliam, 1974 [Petroleum Development Act

 

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1974 (PDA)] dan mengikut Peraturan 5, Peraturan-peraturan Petroliam 1974 [Petroleum Regulations 1974 (PDR) yang diwakilkan kepada saya oleh YAB Perdana Menteri Malaysia, saya dengan ini mengeluarkan lessen di bawah Peraturan 3 Peraturan-peraturan Petroliam ini bagi tujuan di atas kepada:-

 

[2nd Respondent]

 

Butir-butir Lesen adalah seperti berikut:-

 

Bidang pembekalan/perkhidmatan: …

 

Syarat-syarat Khas yang dikenakan ke atas Lesen ini:-Tertakluk kepada syarat khas seperti di lampiran berkaitan.

 

Syarat-syarat Am Lesen ini adalah seperti yang tercatit di muka sebelah.

 

SYARAT-SYARAT AM LESEN PETRONAS

 

SYARAT KHAS LESEN

 

(emphasis added).

 

I have perused the Petronas License. The Alleged Condition in Petronas License is not stated in the special conditions (syarat khas) and general conditions (syarat am) in the Petronas License. There is therefore no evidential basis for the Respondents to rely on the

 

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Alleged Condition in Petronas License to invalidate the 2nd Trust Deed (2nd Respondent). As held by Hasnah Mohammad Hashim J in the Conspiracy Suit –

 

“ The Trust Deeds

 

rrf

 

Jacob [3rd Respondent], himself, gave evidence that the Alcim Sdn. Bhd. [2nd Respondent] was formed purely to procure Petronas license, …

 

The arrangement was reached to ensure that the Petronas license will remain intact and that ALCIM will be able to procure jobs or tender bids from Petronas by maintaining the Bumiputera status of the company. This is of course assuming such policy exists in Petronas as the Plaintiffs did not call as a witness representative from Petronas to confirm or deny that such policy is in practice. Therefore, based on the documentary and oral evidence, this Court is of the considered view that the Trust Deeds are valid and enforceable. ”

 

(emphasis added);

 

(c) even if this court assumes the existence of the Alleged Condition in Petronas License, such a condition is not “law”. Section 3 of the Interpretation Acts 1948 and 1967 (IA) provides that the term “law has the meaning assigned by Article 160(2) of the Federal Constitution (FC). Article 160(2) FC provides –

 

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“law” includes written law, the common law in so far as it is in operation in the Federation or any part thereof, and any custom or usage having the force of law in the Federation or any part thereof; ”

 

(emphasis added).

 

Based on the meaning of the term “law in s 3 IA read with Article 160(2) FC, the Alleged Condition in Petronas License does not constitute –

 

(i) “written law” (defined in s 3 IA to mean, among others, FC, State

 

Constitutions, Acts of Parliament and subsidiary legislation made thereunder);

 

(ii) “common law in so far as it is in operation” in Malaysia; and

 

(iii) “custom or usage having the force of law” in this country

 

– which may invalidate the 2nd Trust Deed (2nd Respondent);

 

(d) Petronas is a statutory corporation under PDA and CA. This is clear from the long title to PDA and s 3(1) PDA as follows –

 

“An Act to provide for exploration and exploitation of petroleum whether onshore or offshore by a Corporation in which will be

 

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vested the entire ownership in and the exclusive rights, powers, liberties and privileges in respect of the said petroleum, and to control the carrying on of downstream activities and development relating to petroleum and its products; to provide for the establishment of a Corporation under the Companies Act 1965 [Act 125] or under the law relating to the incorporation of companies and for the powers of that Corporation; and to provide for matters connected therewith or incidental thereto

 

The Corporation

 

3(1) Notwithstanding section 22 of the Companies Act 1965, relating to the names of companies, the Corporation shall be styled as the Petroleum Nasional Berhad or in short form PETRONAS.’

 

(emphasis added).

 

It is clear from the long title to PDA and s 3(1) PDA that Petronas is not a legislative body which can pass “law”. I will discuss later whether any condition attached to a Petronas license may attract the application of public policy in this case;

 

(e) regulation 3 PDR provides that an application for a Petronas license may be made to the President of Petronas. Regulation 5 PDR states as follows –

 

“Approval and conditions

 

reg 5(1) The Chairman and Chief Executive of PETRONAS shall process applications made to them under

 

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regulation 3 and shall thereafter forward them to the Prime Minister who shall reject or approve such applications.

 

(1A) The Secretary-General, Ministry of International Trade and Industry and the Secretary General, Ministry of Internal Trade and Consumer Affairs shall process applications made to them under regulation 3A(1) and (2), as the case may be and shall thereafter forward them to the Prime Minister who shall reject or approve such applications.

 

(1AA) Permission and licences granted in pursuance of the applications made under sub-regulations (1) and (1A) shall be subject to the payment of fees as specified in the Schedule hereto.

 

(2) In approving any regulation for a licence or

 

permission under regulation 3 or regulation 3A the Prime Minister or any such person to whom such powers have been delegated by him may impose such terms and conditions as he may deem fit.

 

(3) Without prejudice to the generality of the foregoing

 

the said conditions may relate to any of the following:

 

(i) royalties, bonuses, levies or other such payments;

 

(ii) fees as specified in the Schedule hereto;

 

(iii) work and investment programme;

 

(iv) method of working;

 

(v) inspection of worksite and plant;

 

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(vi) employment and training;

 

(vii) report of discovery and production of petroleum;

 

(viii) submission of all data, information and records connected in any survey or research;

 

(ix) volume of production;

 

(x) quality;

 

(xi) fixing of prices;

 

(xii) keeping and inspection of records including books of account;

 

(xiii) distribution, marketing, including the appointment of retailers, and export;

 

(xiv) purchase of petroleum, petroleum products and petrochemical products from overseas or locally;

 

(xv) option to purchase petroleum: and

 

(xvi) right of pre-emption”

 

If there is a breach of a condition in a license issued by Petronas, Petronas is at liberty to revoke such a license. Such a power vested in Petronas to issue licenses, impose conditions attached to licenses and revoke licenses, does not affect the validity of any trust deed which does not concern Petronas;

 

(f) an express private trust embodied in the 2nd Trust Deed (2nd Respondent) is enforceable in Peninsular Malaysia by virtue of the application of the “rules of equity’ under s 3(1)(a) of the Civil Law Act 1956 (CLA). According to s 3(1) CLA, the application of equity (including the enforcement of express private trust) is only subject to

 

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“written law”. As explained above, there is no “written law” as defined in s 3 IA which prohibits, expressly or by necessary implication, the enforcement of the 2nd Trust Deed (2nd Respondent);

 

(g) I am not able to find any Malaysian case which has invalidated an express private trust on public policy. To the contrary, the following 2 High Court cases support the validity of the 2 Trust Deeds in this case –

 

(i) in Edgar Stephen Pereira v Mohd Nasir bin Abdullah [2008] 1 LNS 537 –

 

(1) the defendant had executed a trust deed stating that the defendant held shares in a security service company, GNT Security Services Sdn. Bhd. (GNT), in trust for the plaintiff;

 

(2) the plaintiff applied to court to enforce the trust deed, by applying for, among others, a transfer of the defendant’s shares in GNT to the plaintiff;

 

(3) the defendant contended that, among others –

 

(3A) the trust deed was illegal because security service licenses could only be issued by Kementerian Dalam Negeri (KDN) to companies with 100% Bumiputera shareholding (KDN’s Condition);

 

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(3B) the trust deed could not be enforced for being contrary to public policy in view of KDN’s Condition; and

 

(3C) GNT’s articles of association did not recognise trusts; and

 

(4) Kang Hwee Ghee J (as he then was) rejected the defendant’s above contentions and held as follows –

 

“It is trite that a trust otherwise valid will not be enforced if it offends against morality, public policy or the provisions of any statute. The transfer of the GNT shares to the plaintiff does not offend against any public policy morality or any statute. The fact that the Kementerian Dalam Negeri had issued licence to operate the security firm to GNT has nothing to do with the ownership of the shares by its shareholders. It would be up to the Kementerian Dalam Negeri to decide whether or not it was prepared to continue to grant GNT the licence after the shares were transferred to the plaintiff.

 

There shall accordingly be an order in terms.’

 

(emphasis added); and

 

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(ii) Edgar Stephen Pereira has been followed by Hamid Sultan Abu Backer J (as he then was) in MR Securities Sdn Bhd v Dr Shaharizuan Shafiei [2011] 1 LNS 280. In MR Securities Sdn Bhd –

 

(1) the plaintiff company acquired shares in a security service company, Semasa Security Sdn. Bhd. (SSSB);

 

(2) the defendant held shares in SSSB on trust for the plaintiff company;

 

(3) the plaintiff company applied for, among others, an order to compel the defendant to transfer the shares in SSSB to the plaintiff company’s nominee;

 

(4) the defendant submitted, among others, that the trust deed was illegal on the ground that there had been a breach of KDN’s requirement; and

 

(5) the defendant’s contention regarding the illegality of the trust deed was rejected as follows –

 

(c) In the instant case the plaintiffs 100% equity shareholder is MRCB and I do not see why they could not appoint their nominees to hold the share on their behalf when there is no objection

 

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from the ministry itself. The defendant has not demonstrated by exhibits and/or affidavit evidence that the trust deed offends morality, public policy or the provision of any statute. In Edgar Stephen Pereira v. Mohd Nasir Bin Abdullah (supra) the court had this to say:-…”

 

(emphasis added).

 

Based on the above 2 High Court decisions, even if the Respondents can prove the existence of the Alleged Condition in Petronas License, I am not inclined to hold that the circumvention of such a condition contravenes the public policy of this country;

 

(h) English cases have declared certain express private trusts to be void as against public policy. I cite the view of “Underhill and Hayton – Law Relating to Trusts and Trustees”, David J Hayton, 16th Edition, at p. 218, as follows –

 

“Case law indicates that the following trusts are void as against public policy (quite apart from problems concerning the beneficiary principle): trusts to provide for payment of fines of convicted poachers (Thrupp v Collett (1858) 26 Beav 125), to procure a peerage (Earl of Kingston v Lady Elizabeth Pierepont (1681) 1 Vern 5), to block up a house for 20 years (Brown v Burdett (1882) 21 Ch D 667), to provide a school for pickpockets or prostitutes (Re Pinion [1965] Ch 85, [1964] 1 All ER 890 CA), to place money to the credit of a company to create a false picture in case of enquiries of the bankers by persons about to do business with the company (Re Great Berlin Steamboat Co (1884) 20 Ch D 616 CA), to provide B

 

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with property only if he becomes destitute, so encouraging irresponsibility with money (Re Hepplewhite’s Will Trusts (1977) Times, 21 January).”

 

From the above authoritative treatise on English law on trusts, it is clear that English cases have only invalidated express private trusts on very limited grounds. I quote the judgment of Henderson J in the English High Court case of Independent Trustee Services Ltd v Hope & Ors [2009] EWHC 2810, at paragraph 112, as follows –

 

“The court should be very wary of appeals to public policy, which is still the “unruly horse” famously referred to by Burrough J in Richardson v Mellish (1824) 2 Bing 229 at 252:

 

“When once you get astride it you never know where it will carry you. It may lead you from the sound law. It is never argued at all but when other points fail.” ”

 

(emphasis added); and

 

(i) the fiduciary and statutory duties owed to the Companies by the 3rd and 4th Respondents as the Companies’ directors, including the statutory duty under s 132(1E) CA, are distinct from the legality and enforcement of the 2 Trust Deeds. Company directors who breach fiduciary and statutory duties owed to their companies, are liable in civil and criminal law to the companies [s 132(3) CA prescribes penal sanctions for a breach of s 132 CA]. However, such a breach does not in itself invalidate an express private trust.

 

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68. All the cases cited by the Respondents (Respondents’ Cases) may be distinguished from this case on one or more of the following grounds:

 

(a) there is no breach of any “law” [within the meaning of s 3 IA read with Article 160(2) FC] in this case. The Respondents have even failed to prove the Alleged Condition in Petronas License;

 

(b) for reasons explained above, this court cannot apply public policy in this case; and/or

 

(c) the Respondents’ Cases do not concern 2 express private trusts.

 

69. Kondapuram, at p. 521-524, can be distinguished on the ground that the petitioner’s allegations in a Section 181 Action amounted to a deception of the licensing board, “Pusat Perkhidmatan Kontraktof’, and the government that the fifth respondent company was a Bumiputera company. Such a deception enabled the fifth respondent company to secure “special contracts” and this was designed to circumvent the then applicable New Economic Policy (NEP). Hence, the High Court struck out the Section 181 Action on the ground that there was a contravention of public policy. The High Court relied on, among others, s 24(e) of the Contracts Act 1950 (CA 1950). Kondapuram does not assist the Respondents in this case because –

 

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(a) there was deception in Kondapuram. The Respondents have not adduced any evidence that Petronas has been deceived in this case; and

 

(b) it is clear that NEP constitutes public policy in this country. For reasons expressed earlier in this judgment, I am not prepared to hold that a circumvention of the Alleged Condition in Petronas License is contrary to public policy in Malaysia.

 

It is to be noted that s 24(e) CA 1950 only applies to “agreements” [defined in s 2(e) CA 1950] and not to trust deeds.

 

70. In Norman Disney & Young, the agreements sought to be enforced by the plaintiff firm of consulting engineers, had covertly circumvented s 7A(3) read with s 10(4) of the Registration of Engineers Act 1967. As such, the High Court struck out the suit pursuant to –

 

(a) s 24(a) CA 1950 (the agreements were forbidden by law); and

 

(b) s 24(b) CA 1950 (the agreements were of such a nature that, if permitted, would defeat the law).

 

71. The material facts in Suntuso Jacob are as follows:

 

(a) at the material time, the administrative guidelines of the Singapore’s Registrar of Ships only accepted registration of ships owned by

 

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companies incorporated in Singapore wherein half or more of the issued shares of the company were owned by Singaporeans; and

 

(b) the appellant was an Indonesian who owned 190,000 out of 200,000 shares of a company incorporated in Singapore. The respondent was a Singaporean who held the remaining 10,000 shares in the company. The appellant transferred 92,000 shares in the company to the respondent without any payment by the respondent. This was to enable the respondent, a Singaporean, to hold the majority shares in the company and to register the company’s ship with Singapore’s Registrar of Ships as a ship owned by a company with a Singaporean as the company’s majority shareholder.

 

In Suntuso Jacob the Singapore Court of Appeal affirmed the High Court’s decision in disallowing the appellant’s claim that the respondent held the 92,000 shares in the company in trust for the appellant. This decision was premised on the ground that the appellant had practiced a deception on the public administration and consequently, the court would not assist the appellant to enforce the trust as the appellant had not come to equity with clean hands. Unlike Suntuso Jacob, the Petitioner in this case had not deceived any person, let alone the public administration in this country.

 

Q1. Sections 23 and 126 to 129 EA

 

72. Sections 23 and 126 to 129 EA provide as follows:

 

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‘Admissions in civil cases when relevant

 

23. In civil cases no admission is relevant if it is made either upon an express condition that evidence of it is not to be given, or under circumstances from which the court can infer that the parties agreed together that evidence of it should not be given.

 

Explanation – Nothing in this section shall be taken to exempt any advocate from giving evidence of any matter of which he may be compelled to give evidence under section 126.

 

Professional communications

 

126(1) No advocate shall at any time be permitted, unless with his client’s express consent, to disclose any communication made to him in the course and for the purpose of his employment as such advocate by or on behalf of his client, or to state the contents or condition of any document with which he has become acquainted in the course and for the purpose of his professional employment, or to disclose any advice given by him to his client in the course and for the purpose of such employment:

 

Provided that nothing in this section shall protect from disclosure –

 

(a) any such communication made in furtherance of any illegal purpose;

 

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(b) any fact observed by any advocate in the course of his employment as such showing that any crime or fraud has been committed since the commencement of his employment.

 

(2) It is immaterial whether the attention of the advocate was or was not directed to the fact by or on behalf of his client.

 

Explanation – The obligation stated in this section continues after the employment has ceased.

 

Section 126 to apply to interpreters, etc.

 

127. Section 126 shall apply to interpreters and the clerks or servants of advocates.

 

Privilege not waived by volunteering evidence

 

128. If any party to a suit gives evidence therein at his own instance or otherwise, he shall not be deemed to have consented thereby to such disclosure as is mentioned in section 126; and if any party to a suit or proceeding calls any such advocate as a witness, he shall be deemed to have consented to the disclosure, only if he questions the advocate on matters which but for such question he would not be at liberty to disclose.

 

Confidential communications with legal advisers

 

129. No one shall be compelled to disclose to the court any confidential communication which has taken place between him and his legal professional adviser unless he offers himself as a witness, in which case he may be compelled to disclose any such

 

129

 

communications as may appear to the court necessary to be known in order to explain any evidence which he has given, but no others

 

(emphasis added).

 

Q2. Scope of legal privilege under ss 126(1) and 129 EA

 

73. Our ss 126, 128 and 129 EA are in pari materia with ss 128, 130(1), (2) and 131(1) of Singapore’s Evidence Act [EA (Singapore)]. As such, I will refer to Singapore cases in construing our ss 126(1) and 129 EA. Nonetheless, it should be noted that EA (Singapore) has additional provisions such as ss 128A (communications with legal counsel in entity), 130(3) and 131(2). Section 129 EA (Singapore) is also different from our s 127 EA.

 

74. In Dr. Pritam Singh v Yap Hong Choon [2007] 1 MLJ 31, at 34, Gopal Sri Ram JCA (as he then was) delivered the following judgment of the Court of Appeal:

 

“[Section 126(1) EA] substantially reproduces the common law of England and English authorities are therefore relevant (See Framji Bhicaji v Mohansing (1893) ILR 18 Bom 263)”

 

75. My understanding of ss 126(1) and 129 EA is as follows:

 

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(a) the word “advocate” used in s 126(1) EA, is not defined in EA. As EA has been revised under the Revision of Laws Act 1968 (RLA), s 2(1)(b) IA provides that Part I IA applies to interpret EA. Section 3 in Part I IA provides that the word “advocate” means “a person entitled to practise as an advocate or as an advocate and solicitor under the law in force in any part of Malaysia”. Based on the meaning of the word “advocate” given in s 3 IA –

 

(i) s 126(1) EA confers legal privilege on communications between a practising Advocate and Solicitor (A&S) in Malaysia and A&S’s client;

 

(ii) s 126(1) EA does not apply to communications between an inhouse legal counsel and his or her employer (Employer). In this respect, s 128A EA (Singapore) provides for legal privilege to be attached to communications between a “legal counsel in entity’ with the “entity’ in question. Section 128A(4) EA (Singapore) provides for legal privilege for communications by a legal counsel employed by one of a number of related corporations while s 128A(5) EA (Singapore) concerns privilege for a legal counsel in a “public agency’ [which is defined widely in s 128A(6) EA (Singapore)].

 

I am of the view that legal privilege should be attached to communications between in-house legal counsel and Employer along the lines of s 128A EA (Singapore) [with the same exceptions to s 126(1) EA]. The legal privilege proposed to be attached to communications between in-house counsel and Employer, is to ensure that all issues can be freely addressed in the interest of the Employer as well as in the interest of justice (justice may be served if the Employer is well advised in respect

 

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of all the Employer’s rights and obligations). It is hoped that our legislature will amend EA to introduce a provision similar to s 128A EA (Singapore); and

 

(iii) it is not clear whether communications between practising Malaysian A&S and foreign lawyers (practising lawyers and internal legal advisors) (Foreign Lawyers), is privileged under ss 126(1) and 129 EA. I am in favour of extending legal privilege [with the same exceptions to s 126(1) EA] to communications between practising Malaysian A&S and Foreign Lawyers because in a borderless world, there will inevitably be transboundary legal issues whereby practising Malaysian A&S may need expert opinions from Foreign Lawyers to resolve such issues. Such communications should be protected by legal privilege to ensure a free flow of information between practising Malaysian A&S and Foreign Lawyers. The unrestricted communications between practising Malaysian A&S and Foreign Lawyers is in the interest of the practising Malaysian A&S and the Malaysian A&S’s client (who will then be able to make an informed decision regarding the client’s rights and liabilities). Once again, is my hope that Parliament may extend the scope of legal privilege in s 126(1) EA (with the same exceptions) to cater for communications between practising Malaysian A&S and Foreign Lawyers;

 

(b) s 126(1) EA provide that the following 3 matters are legally privileged and cannot be adduced as evidence –

 

(i) any communication made by a client to his or her A&S, cannot be disclosed by the A&S;

 

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(ii) an A&S shall not state the contents or condition of any document with which the A&S has become acquainted in the course and for the purpose of the A&S’s professional employment; and

 

(iii) an A&S shall not disclose any advice given by the A&S to his or her client in the course and for the purpose of the A&S’s professional employment.

 

The above 3 legally privileged matters have been explained by Andrew Phang Boon Leong JCA in the Singapore Court of Appeal case of Skandinaviska Enskilda Banken AB (PUBL), Singapore Branch v Asia Pacific Breweries (Singapore) Pte Ltd and other appeals [2007] 2 SLR 367, at paragraph 32 (Skandinaviska). It is to be noted that Skandinaviska has been referred to by our Federal Court in Dato’ Anthony See Teow Guan v See Teow Chuan & Anor [2009] 3 MLJ 14, at 24;

 

(c) there are 3 exceptions to legal privilege conferred by s 126(1) EA [3 Exceptions to s 126(1) EA]. The 3 Exceptions to s 126(1) EA are provided in s 126(1) EA itself and are as follows –

 

(i) when the client has expressly consented to the disclosure of legal communications as provided in s 126(1) EA (1st Exception to s 126(1) EA). There cannot be an implied

 

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consent or implied waiver by the client to the A&S’s disclosure of legally privileged communications. This is clear from the following 2 cases –

 

(1) in Dato’ Anthony See Teow Guan, at p. 26, 27, 28-29, 30 and 33, Nik Hashim FCJ decided as follows in the Federal Court –

 

“[19] To lend support to the above findings the respondents submitted that the principle at common law ‘once privileged, always privileged’ does not extend the privilege to protect a communication which is not confidential or has subsequently lost its confidentiality. The principle of confidentiality is co-extensive with that of legal professional privilege under the section. There can be no privilege without confidentiality. Once confidence ceases privilege ceases.

 

[20] With respect, I do not agree. I agree with the appellant that the Court of Appeal, in taking the ‘loss of confidentiality’ approach to determine loss of privilege, had failed to recognise the common law maxim ‘once privileged, always privileged’ (see per Cockburn CJ in Bullock & Co v Corry & Co (1878) 3 QBD 356 at p 358) as being embodied in ss 126-129 of the Act. This common law maxim has been endorsed and approved by the high authority of the House of Lords and Privy Council in the cases quoted earlier where the privilege was accepted as being absolute. The maxim has hitherto been followed in Malaysia as seen in the High Court case of Dato’ Au Ba Chi v Koh Keng Kheng [1989] 3 MLJ 445 which was adopted by the learned trial judge in the present case. Relying

 

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on the wording of s 126 of the Act, Eusoff Chin J (as he then was) in Dato’ Au Ba’s case held the maxim ‘once privileged always privileged’ applied. The court said at p 447:

 

Section 126 also says that the legal adviser shall not be permitted at any time to disclose professional communications. It is said that a communication once privileged is ‘always privileged’ (per Cockburn CJ in Bullock v Corry & Co).

 

[21] It may be noted that Dato’ Au Ba’s case went on appeal to the then Supreme Court and the High Court’s decision was upheld but unfortunately there was no written judgment of the Supreme Court. Hence, the importance of this decision.

 

[25] Hence, I hold that the legal professional privilege under s 126 of the Act is absolute and it remains so until waived by the privilege holder, ie the client.

 

[30] Before us, learned counsel for the respondents argued that the Court of Appeal was right in adopting the purposive approach in interpreting s 126 and held that the privilege had been waived by disclosing the legal opinion to various third parties including the respondents. The appellant could not resist disclosure by claiming privilege when the document had already been disclosed and in the possession of the respondents.

 

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[31] It must be noted that s 126 of the Act was enacted to give protection to legal communications and legal advice between the advocate and his client from disclosure. The section uses strong language in imposing the prohibition. No advocate ‘shall at any time be permitted’ to disclose such communication ‘unless with his client’s express consent’. By its terms, the section is quite straightforward. As such, the Court of Appeal had no choice but to give effect to the plain meaning of the words used in s 126 of the Act rather than seek to expand or modify the statutory provisions by way of reference to common law principles. McDougall J in delivering the judgment of the Court of Appeal of New South Wales in Sugden v Sugden [2007] NSWCA, said at para 34:

 

… the availability of client legal privilege was to be decided in accordance with the relevant provisions of the Evidence Act.

 

Hence, the various authorities and tests on the common law principles of waiver or acquiescence relied on by the respondents and adopted by the Court of Appeal cannot be taken to apply in the face of the specific and singular statutory exception which is clearly set out in the section.

 

In the instant case, s 126 of the Act permits only one exception when privilege no longer applies ie upon the express consent of the client given and directed to the advocate who is called to court to disclose the professional communication made to him by his client or the advice given by the advocate. The case of Dato’ Au Ba, makes that clear at p 447:

 

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… since the law requires the defendants must first give their express consent to their solicitors before the document could be released to anyone. Such consent could have been endorsed in the document itself, or given separately in writing to the effect that they consented to the document being released to the first plaintiff

 

(Emphasis added.)

 

Thus, the term ‘express consent’ in s 126 imports the requirement that there must be an intentional and deliberate act to waive the legal privilege by the privilege holder, ie the client.

 

[32] The need for the client’s express consent before the privilege can be waived is the same in Singapore. In Yeo Ah Tee v Lee Chuan Meow [1962] MLJ 413, the Singapore Court of Appeal held that the privilege attaching to a statement supposedly made by the client to the Legal Aid Bureau, the client’s solicitors, which the client denied making, was not expressly waived by the client’s saying that he would not object to the statement being produced if he made it.

 

[33] So also is the position in India. In Mandesan v State of Kerala 1995 Cri LJ 61, the notion that in the absence of ‘express consent’ there could be loss of privilege by a failure to object or by waiver or acquiescence on the part of the client was advocated. In that case the advocate had already given evidence of the communication between

 

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him and the client and no objection had been raised on the part of the client but the High Court ruled that such communication was inadmissible under s 126.

 

[34] Thus, the common law rule of waiver by implication or imputation is not recognised by the cases under either the Malaysian, Singapore or Indian Evidence Act.

 

[36] The disclosure of the legal opinion by the respondents would not remove the privilege attached to the legal opinion.

 

[48] There is another matter which was referred to by the Court of Appeal which needs to be addressed. The Court of Appeal at paras 54-55 of the judgment ruled that privilege could not be claimed because the legal opinion was now in the hands of the respondents, having been given to them by the external auditors who received it from the appellant. The case of Daya Shanker Dubey was cited in support to say that privilege could not be claimed because it was already in the possession of the opposite party. It must be noted that Daya Shanker Dubey was largely a contempt case which had stated the proposition on legal privilege too broadly. The case failed to note that where legal professional privilege is claimed the rule is one of admissibility of the document in whosesoever hand it is found. A document cannot be admitted as evidence if it is privileged even if it is in the hands of the opposite party. For example, if it is privileged, a document in the hands of an opposite party may be recovered back (see B v Auckland District Law Society). If it has wrongly been released to the opposite side in discovery proceedings or otherwise,

 

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it may be injuncted from use (see International Business Machines Corp).

 

[49] Thus, the finding of the Court of Appeal that privilege was lost or could not be claimed because the legal opinion was already in the hands of the opposite party is unsustainable.”

 

(emphasis added); and

 

(2) the judgment of James Foong J in the High Court case of Cheah Cheng Hoc & Ors v Liew Yew Thiam & Ors

 

[2000] 6 MLJ 204, at 217, as follows –

 

“Mr Chandran, counsel for the plaintiffs, in arguing against the application of these provisions in the circumstances of this case, attempted to influence me that by an Indian authority of Rev Fr Bemad Thattil v

 

Ramachandran Pillai (1987) CRI LJ 739 the strict rule of ‘express consent’ under s 126 of the Evidence Act can be inferred from ‘facts and circumstances’ rather than being restricted to be only in ‘writing’ as decided in Dato’ Au Ba Chi & Ors v Koh Keng Kheng & Ors [1989] 3 MLJ 445 at p. 447. His objective was to overcome s 126 of the Evidence Act by pointing out that the acts of the defendants in affirming an affidavit verifying documents, the filing of a list of documents (the contents of these documents contain the alleged privileged communications), and the examination of the plaintiffs’ witness on such communication would imply that the defendants had consented to the disclosure of such communication by the plaintiffs.

 

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I disagree with this contention. The term used in s 126 of the Evidence Act is ‘express consent’. By this, there must be some element of clear, explicit and predetermined intention of the defendants to consent to the plaintiffs in disclosing the privilege communication, not by any indirect or inferred manner. The affirmation of an affidavit and the filing of documents containing the privilege communication were mere processes required by the rules and procedure of the courts in getting this case ready for trial. They did not relate directly to the consent to disclose, thus could not be considered as express consent given by the defendants. As for the examination of the plaintiffs’ witness on such matter, it was a right granted to the defendants under the law to crossexamine any of the plaintiffs’ witnesses on matters which were relevant to the case. In the exercise of this right of cross-examination, there was no waiver of the defendants’ legal professional privilege, quite unlike the situation provided under s 128 [EA]. That is when the defendants themselves calling these advocates as witnesses and then questioning them on such privileged communication. But in this case, the advocates were the plaintiffs and their witnesses; the defendants did not call upon them to testify. Thus the privilege is not waived.”

 

(emphasis added);

 

(ii) when the legal communications is made in furtherance of any illegal purpose as stated in proviso (a) to s 126(1) EA (2nd Exception to s 126(1) EA); and

 

(iii) when the A&S has observed any fact in the course of the A&S’s employment which shows that a crime or fraud has been

 

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committed since the commencement of the A&S’s employment. This is stated in proviso (b) to s 126(1) EA (3rd Exception to s 126(1) EA);

 

(d) the purpose of s 126(1) EA has been explained in many cases. Suffice it for me to cite Ong Hock Thye CJ (Malaya)’s judgment in the Federal Court case of Public Prosecutor v Haji Kassim [1971] 2 MLJ 115, at 116, as follows –

 

“The only relevant provision in our Evidence Ordinance excluding professional confidences is section 126, which states that no advocate and solicitor shall at any time be permitted, unless with his client’s express consent, to disclose any communication made to him and in the course of his employment as such. This rule is founded on the principle that the conduct of legal business without professional assistance is impossible and on the necessity, in order to render such assistance effectual, of securing full and unreserved intercourse between the two .”

 

(emphasis added);

 

(e) the EA, despite its name, is a code of law which is intended to be comprehensive – the Privy Council’s opinion delivered by Lord Diplock in an appeal from Malaysia, Public Prosecutor v Yuvaraj [1969] 2 MLJ 89, at 90. As s 126(1) EA has expressly provided for the 3 Exceptions to s 126(1) EA, there cannot be any Common Law or equitable exception to legal privilege. Any Common Law or equitable exception to legal privilege is not only inconsistent with the

 

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clear words of s 126(1) EA but will also erode the general rule of legal privilege provided in s 126(1) EA;

 

(f) in view of the importance of legal privilege provided by s 126(1) EA, the 3 Exceptions to s 126(1) EA should be strictly construed. Any wide interpretation of the 3 Exceptions to s 126(1) EA may undermine, if not rendered redundant, the general rule of legal privilege;

 

(g) a party claiming legal privilege under s 126(1) EA in respect of a piece of evidence, has the initial burden to satisfy the court concerning the application of such a legal privilege. If this initial burden is discharged, the legally privileged evidence must be excluded unless the opposing party is able to satisfy the court regarding the application of one or more of the 3 Exceptions to s 126(1) EA;

 

(h) in deciding whether a piece of evidence is legally privileged or otherwise under s 126(1) EA, the court should peruse such evidence to ascertain whether legal privilege attaches to such evidence and if such evidence is legally privileged, whether any one or more of the 3 Exceptions to s 126(1) EA applies to admit such evidence. I rely on “withoutprejudice” communications cases as follows –

 

(i) Ian Chin decided as follows in the High Court case of Wong Nget Thau v Tay Choo Foo [1994] 3 MLJ 723, at 734 –

 

“The fact that a document is headed ‘without

 

prejudice’ does not conclusively or automatically

 

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render it privileged from admission in evidence in any subsequent proceedings and if a claim for such privilege for the document is challenged the court will look at the document to determine its nature. The court must in each case, when deciding whether a particular letter marked ‘without prejudice’ is admissible, consider whether the letter was part of a genuine attempt to settle a dispute .”

 

(emphasis added); and

 

(ii) in Boss s/o Ramasamy v Penang Port Sdn Bhd & Anor

 

[1996] 5 MLJ 511, at 517, Vincent Ng (as he then was) in the High Court held as follows –

 

“It is settled law that in order to determine the issue of admissibility of a document, the court may examine all the relevant documents in question (see South Shropshire District Council v Amos; Ted Bates (M) Sdn Bhd v Balbir Singh Jholl [1979] 2 MLJ 257; and Re Sunshine Securities Pte Ltd [1978] 1 MLJ 57). The decision in South Shropshire District Council v Amos reaffirms the principle enunciated in Re Daintrey, ex p Holt, wherein in the course of giving judgment, Vaugham Williams J said at p 119:

 

… In our opinion the rule which excludes documents marked ‘without prejudice’ has no application unless some person is in dispute or negotiation with another, and terms are offered for the settlement of the dispute or negotiation, and it seems to us that the judge must necessarily be entitled

 

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to look at the document in order to determine whether the conditions, under which alone the rule applies, exist.

 

The rule is a rule adopted to enable disputants without prejudice to engage in discussion for the purpose of arriving at terms of peace, and unless there is a dispute or negotiations and an offer, the rule has no application. It seems to us that the judge must be entitled to look at the document to determine whether the document does contain an offer of terms.”

 

(emphasis added); and

 

(i) the court has a discretion to hold a “trial within a trial’ (voir dire) to ascertain the admissibility of a piece of evidence which is alleged to be legally privileged. In the High Court case of See Teow Chuan & Anor v Dato’ Anthony See Teow Guan [1999] 4 MLJ 42, at 45, James Foong J (as he then was) held a voir dire to determine the admissibility of a legal opinion. In this case, I had exercised my discretion not to hold a “trial within a trial’ as the admissibility of evidence whereby legal privilege had been claimed by the Petitioner, could be easily decided based on the evidence adduced in this case and the parties’ submission.

 

Q3. Admissibility of communications between Petitioner and Mr. Muralee

 

76. The Respondents rely on the following evidence to resist this petition:

 

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(a) Petitioner’s email dated 21.7.2011 to Mr. Muralee (Petitioner’s Email dated 21.7.2011);

 

(b) Petitioner’s first email dated 18.8.2011 to Mr. Muralee (Petitioner’s 1st Email dated 18.8.2011);

 

(c) Mr. Muralee’s reply dated 18.8.2011 to Petitioner’s 1st Email dated

 

18.8.2011 (Mr. Muralee’s Email dated 18.8.2011);

 

(d) Petitioner’s second email dated 18.8.2011 to Mr. Muralee (Petitioner’s 2nd Email dated 18.8.2011); and

 

(e) Petitioner’s email dated 20.8.2011 to Mr. Muralee (Petitioner’s Email dated 20.8.2011)

 

(5 Emails between Petitioner and Mr. Muralee).

 

77. The Respondents have submitted that the 5 Emails between Petitioner and Mr. Muralee are admissible as evidence in this case on the following grounds:

 

(a) the Petitioner had waived legal privilege in respect of the 5 Emails between Petitioner and Mr. Muralee when –

 

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(i) the Petitioner had said in his witness statement adduced in the Conspiracy Suit that the Petitioner’s instruction to Mr. Muralee (who acted for him in the buy-out negotiation with the 3rd Respondent) had nothing to do with the 2009 Suit; and

 

(ii) the Petitioner had admitted the Petitioner’s Email dated

 

21.7.2011 as evidence in the Conspiracy Suit; and

 

(b) the 5 Emails between Petitioner and Mr. Muralee have shown that the Petitioner has committed “perjury in his evidence which is a criminal offence that allows the court to look at any privileged communication. Furthermore, the 5 Emails between Petitioner and Mr. Muralee have proven that the Petitioner and Mr. Muralee have committed fraud on the Companies by planning and executing the plan to sabotage the 2009 Suit and to cause the 2nd Respondent to lose the Petronas License.

 

78. It is not disputed that Mr. Muralee is a practising A&S of the High Court of Malaya who has been retained to act for the Petitioner in respect of, among others, the dispute in this case.

 

79. Based on Wong Nget Thau and Boss, I have perused the 5 Emails between Petitioner and Mr. Muralee and after such a perusal, I am satisfied that the 5 Emails between Petitioner and Mr. Muralee constitute legal communications regarding the dispute in this petition. Accordingly, the 5 Emails between Petitioner and Mr. Muralee are legally privileged

 

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under s 126(1) EA and cannot be adduced as evidence unless the Respondents can discharge the onus to prove the application of any one or more of the 3 Exceptions to s 126(1) EA.

 

80. In respect of the 5 Emails between Petitioner and Mr. Muralee, I am of the view that the Respondents have failed to prove the application of the 3 Exceptions to s 126(1) EA. My decision is based on the following reasons:

 

(a) the 1st Exception to s 126(1) EA can only apply if there is “express consent’ by the client (Petitioner), to the admissibility of the 5 Emails between Petitioner and Mr. Muralee as evidence in this case. This is clear from the Federal Court’s judgment in Dato’ Anthony See Teow Guan and the High Court case of Cheah Cheng Hoc. As a matter of stare decisis, I am bound by the Federal Court case of Dato’ Anthony See Teow Guan.

 

Based on Dato’ Anthony See Teow Guan and Cheah Cheng Hoc,

 

there cannot be any implied, tacit or constructive waiver to legally privileged evidence. Furthermore, according to Dato’ Anthony See Teow Guan, the fact that legally privileged document or information is already in the possession of the opposing party or any other third party, does not mean that the legal privilege is lost and the party claiming legal privilege, may apply to court to recover such legally privileged document or information;

 

(b) to invoke the 2nd Exception to s 126(1) EA, there must be evidence that the 5 Emails between Petitioner and Mr. Muralee were “made in

 

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furtherance of any illegal purpose”. I rely on Abdul Malik Ishak J’s judgment in the High Court case of Re The Detention of Leonard Teoh Hooi Leong [1998] 1 MLJ 757, at 764, as follows –

 

“ Was Leonard Teoh a potential witness or a prime suspect? It cannot be denied that as counsel for Nor’aishah, Leonard Teoh was privy to certain privileged information. But the veil of privilege may be set aside by the court on the application of a solicitor who suspects that fraud or a crime had been committed by his client: Finers (a firm) & Ors v Miro [1991] 1 All ER 182; [1991] 1 WLR 35 (CA). A solicitor cannot be compelled to disclose legitimate communications, whether oral or written, passing directly between him and his client. This privilege, however, does not extend to communications made in furtherance of a fraud or a criminal act (Lawrence v Campbell (1859) 4 Drew 485; O’Rourke v Darbishire & Ors [1920] AC 581 (HL) (which was dutifully followed by Butler v Board of Trade [1971] Ch 680; [1970] 3 All ER 593); Minter v Priest [1930] AC 558, at pp 580-582 (HL); Re Sarah C Getty Trust [1985] QB 956; [1985] 2 All ER 809 and Balabel & Anor v Air India [1988] Ch 317; [1988] (CA)). As the police were investigating a kidnapping case involving Nor’aishah, Leonard Teoh’s refusal to inform the police of Nor’aishah’s whereabouts made him a prime suspect and the remand order would therefore be appropriate in the circumstances (PP v Audrey Keong Mei Cheng). The communications between Leonard Teoh and Nor’aishah were no longer privileged as it involved a criminal investigation. This was my judgment and I so hold accordingly.”

 

(emphasis added).

 

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In this case, the Respondents contended that the 5 Emails between Petitioner and Mr. Muralee would show that the Petitioner had given false evidence under s 193 of the Penal Code (PC) (PC does not use the term “perjury’). With respect, I am unable to accede to this submission. The 5 Emails between Petitioner and Mr. Muralee, upon my perusal, do not show any communication between the Petitioner and Mr. Muralee to commit any offence, let alone an offence of giving false evidence under s 193 PC. Accordingly, the 5 Emails between Petitioner and Mr. Muralee are not “made in furtherance of any illegal purpose” so as to attract the application of the 2nd Exception to s 126(1) EA.

 

I am not able to accept the Respondents’ submission that the contents of the 5 Emails between Petitioner and Mr. Muralee have proven that the Petitioner and Mr. Muralee have committed fraud on the Companies by sabotaging the 2009 Suit and/or by causing the 2nd Respondent to lose the Petronas License. This is because firstly, as explained above, there is no evidence regarding the Alleged Condition in Petronas License. Secondly, the Petitioner is a coplaintiff in the 2009 Suit and is entitled to decide how to proceed in the 2009 Suit in his best interest, even if such a decision causes detriment to the other co-plaintiffs. No party in a pending suit can be compelled to act contrary to his or her interest; and

 

(c) there is no evidence to support the invocation of the 3rd Exception to s 126(1) EA in this case.

 

81. In view of the above decision to exclude all communications between the Petitioner and Mr. Muralee under s 126(1) EA –

 

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(a) Extracted Information from the Petitioner’s BlackBerry and Laptop which contained communications between the Petitioner and Mr. Muralee, should be similarly excluded under s 126(1) EA; and

 

(b) Encik Shukri’s analysis of the Extracted Information which pertains to communications between the Petitioner and Mr. Muralee, should not be considered by this court in deciding this petition.

 

82. My decision not to admit the 5 Emails between Petitioner and Mr. Muralee based on s 126(1) EA, is fortified by the Court’s Ruling dated 26.4.2013 (in the Conspiracy Suit). The Respondents did not appeal to the Court of Appeal against the Court’s Ruling dated 26.4.2013.

 

Q4. Admissibility of communications between Petitioner and Dato’ Stanley

 

83. The Respondents have applied to admit Dato’ Stanley’s email dated

 

28.7.2011 to the Petitioner (Dato’ Stanley’s Email dated 28.7.2011) as evidence in this case. Dato’ Stanley’s Email dated 28.7.2011 has been copied to the 3rd Respondent and Mr. Thomas George.

 

84. The Petitioner has sought to exclude Dato’ Stanley’s Email dated

 

28.7.2011 on the ground that Dato’ Stanley was the Petitioner’s learned counsel in the 2009 Suit and such evidence is legally privileged under s 126(1) EA.

 

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85. I am of the view that Dato’ Stanley’s Email dated 28.7.2011 cannot be excluded as evidence under s 126(1) EA. This is because in the 2009 Suit, Dato’ Stanley’s firm acts for, among others, the Petitioner, 1st and 3rd Respondents. As such, in the 2009 Suit, Dato’ Stanley owes fiduciary, legal and ethical duties not only to the Petitioner but also to, among others, the 1st and 3rd Respondents. The 1st and 3rd Respondents as Dato’ Stanley’s clients, have a case law right to be given Dato’ Stanley’s Email dated 28.7.2011 and they may adduce such evidence in this case. My decision is based on the following cases:

 

(a) in Overseas Chinese Banking Corporation Ltd v Lee Tan Hwa & Anor [1989] 1 MLJ 261, at 262, Eusoff Chin J (as he then was) decided as follows –

 

“The rule is that where two parties employ the same solicitor, communications passing between either of them and the solicitor in his joint capacity must be disclosed in favour of the other, and further where the evidence showed that a party had placed himself entirely in the hands of his solicitor and constituted him his general agent in the transaction, the knowledge of the solicitor must be imputed to him: Dixon v Winch [1900] 1 Ch D 736.”

 

(emphasis added); and

 

(b) Tay Yong Kwang JC (as he then was) held as follows in the Singapore High Court case of Foo Ko Hing v Foo Chee Heng [2002] 2 SLR 361, at paragraphs 14-16 –

 

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14 Both the plaintiff and the defendant were former clients of Rey Foo in respect of the same matter. They employed him as their solicitor jointly. Rey Foo’s obligation in the above section continues even though he has ceased to be their solicitor. ‘Client’ in this context would obviously mean both the plaintiff and the defendant as ‘words in the singular include the plural’ (s 2(1) Interpretation Act (Cap 1, 1999 Ed)). The privilege conferred by the Evidence Act is a joint privilege in these circumstances. Rey Foo would be prohibited from disclosing any communication made by one or both of them in the course of his employment as their solicitor unless both of them expressly consent. However, the prohibition is against disclosure to third parties – that is, anyone not within the solicitor-client relationship. The said s 128 does not seek to regulate disclosure within that relationship.

 

15 Solicitors dealing with such clients would take instructions from both of them jointly or from one of them by convention or by express instruction. They would also write to such clients jointly on any matter falling within the scope of their employment. It would therefore be highly artificial, and indeed an impossible task, for the solicitor to have to distinguish between communication with client A and with client B in respect of the same matter. This is not a case of vendor and purchaser instructing the same solicitor where a distinction must be made between communication to the solicitor in the character of one party’s own legal advisor and communication to him in the adverse character of legal advisor for the other party (see Perry v Smith (1842) 9 M & W 681, 152 ER 288).

 

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16 There could therefore be no question of solicitor-client privilege in the interrogatories in issue here ”

 

(emphasis added).

 

Q5. Admissibility of negotiations between 3rd Respondent and Mr. Muralee

 

86. It is not disputed in this case that Mr. Muralee is the Petitioner’s A&S who has been instructed by the Petitioner to negotiate with the 3rd Respondent in the Meeting on 6.9.2011 on the possibility of, among others, the Petitioner buying the 3rd Respondent’s shares in the Companies.

 

87. The 3rd Respondent has secretly recorded the Meeting on 6.9.2011. A copy of the Respondents’ transcript of the Meeting on 6.9.2011 (Respondents’ Transcript) has been exhibited in the Respondents’ 1st Affidavit. The Respondents have submitted that evidence concerning the Meeting on 6.9.2011, including the Respondents’ Transcript, should be admitted on the ground that the Petitioner had waived his right to object to such evidence. Furthermore, according to the Respondents, Mr. Muralee has not denied that the Meeting on 6.9.2011 has taken place. In fact, Mr. Muralee has produced his own transcript of the Meeting on 6.9.2011 (Mr. Muralee’s Transcript).

 

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88. The Petitioner applies to expunge evidence regarding the Meeting on

 

6.9.2011 on the ground that whatever transpired at the Meeting on

 

6.9.2011 constituted inadmissible “without prejudice” communications to settle a dispute between the Petitioner and 3rd Respondent at that time.

 

89. My understanding on the law relating to “without prejudice” negotiations is as follows:

 

(a) many cases have explained the reason why “without prejudice” negotiations should not be admitted as evidence. I will only cite Chang Min Tat FJ’s judgment in the Federal Court case of Malayan Banking Bhd v Foo See Moi [1981] 2 MLJ 17, at 18, as follows:

 

“It is settled law that letters written without prejudice are inadmissible in evidence of the negotiations attempted.

 

This is in order not to fetter but to enlarge the scope of the negotiations, so that a solution acceptable to both sides can be more easily reached .”

 

(emphasis added);

 

(b) according to Abdul Malik Ishak J (as he then was) in the High Court case of Dusun Desaru Sdn Bhd & Anor v Wang Ah Yu & Ors

 

[1999] 5 MLJ 449, at 455, “without prejudice” negotiations is only excluded as evidence if the following 2 conditions are fulfilled –

 

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“Two common features must be present before this privileged communications could be activated:

 

(a) some individuals must be in dispute and that dispute led them to negotiate with one another; and

 

(b) the communication between the parties must contain suggested terms that would finally lead to the settlement of the dispute. ”

 

(emphasis added);

 

(c) “without prejudice” negotiations is not admissible as evidence in the following circumstances –

 

(i) when parties have expressly agreed that “without prejudice” negotiations cannot be adduced as evidence. This is clear from the first limb of s 23 EA (no admission is relevant if it is made … upon an express condition that evidence of it is not to be given). Such an express agreement may be evidenced by the use of the label “without prejudice” on the relevant correspondence. Having said that, the label “without prejudice” is not conclusive. According to Kamalanathan Ratnam J in the High Court case of Daya Anika Sdn Bhd v Kuan Ah Hock [1998] 6 MLJ 537, at 541 –

 

“In The Law and Practice of Compromise by David Foskett (2nd Ed) (Sweet and Maxwell) at p 111, the author did sound a warning as follows:

 

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Practitioners will be aware that many letters are headed ‘without prejudice’ with little thought having been given to whether or not this is appropriate. Quite often, the ‘without prejudice’ label can be overcome because no negotiations are taking place.

 

That being the case, I find that the plaintiff is entitled to judgment for the sum of RMl,014,132.15 and the ‘without prejudice’ veil ought to be lifted, as no negotiations were taking place .”

 

(emphasis added); and

 

(ii) if parties do not use the label “without prejudice” but there is a tacit understanding of the parties that any correspondence and/or conversation between them cannot be admitted as evidence, then such correspondence and/or conversation is inadmissible. This is the second limb of s 23 EA (no admission is relevant if it is made … under circumstances from which the court can infer that the parties agreed together that evidence of it should not be given). I cite the following cases –

 

(1) Ibrahim J’s decision in the High Court case of Ng Chuan Seng v Tan Ah Yoke [1969] 2 MLJ 75, at 76, as follows –

 

“It is clear from the judgment in McTaggart v McTaggart [1948] 2 All ER 754; [1949] P 94; [1949] LJR 82, Mole v Mole [1950] 2 All ER 328, and Theododoropoulas v Theodoropoulas [1963] 2 All ER 772 and other cases that the evidence of P.W.2 was not admissible. In Mole v Mole [1950] 2 All ER 328 for instance, Denning LJ in his judgment at page 329 said:-

 

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“I take it that the principle of McTaggart v. McTaggart applies not only to probation officers, but also to other persons such as clergy, doctors, or marriage guidance counsellors, to whom the parties resort with a view to reconciliation when there is a tacit understanding that the conversations are without prejudice.” ”

 

(emphasis added); and

 

(2) Lord Griffiths decided as follows in the House of Lords’ case of Rush & Tompkins Ltd v Greater London Council & Anor [1988] 3 All ER 737, at 740 –

 

“The rule applies to exclude all negotiations genuinely aimed at settlement whether oral or in writing from being given in evidence. A competent solicitor will always head any negotiating correspondence ‘without prejudice’ to make clear beyond doubt that in the event of the negotiations being unsuccessful they are not to be referred to at the subsequent trial. However, the application of the rule is not dependent on the use of the phrase ‘without prejudice’ and if it is clear from the surrounding circumstances that the parties were seeking to compromise the action, evidence of the content of those negotiations will, as a general rule, not be admissible at the trial and cannot be used to establish an admission or partial admission ”

 

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(emphasis added);

 

(d) “without prejudice” negotiations may be admitted as evidence in the following cases –

 

(i) when there is a settlement of the dispute in question – the Federal Court’s judgment in Malayan Banking Bhd, at p. 18; and

 

(ii) when a party has waived his or her right to object to the admissibility of “without prejudice” negotiations. Our s 23 EA is substantially similar to s 23 EA (Singapore). As such, I will now refer to the Singapore Court of Appeal’s judgment in Lim Tjoen Kong v A-B Chew Investments Pte Ltd [1991] 3 MLJ 4, at 89, delivered by Chan Sek Keong J (as he then was) as follows –

 

“Counsel indeed so argued, that in relying on the plaintiffs’ negotiations with IG by way of defence, the defendant did not waive the privilege with respect to his own without prejudice negotiations with the plaintiffs He relied on the statement of Goff J in Sobell v Boston & Ors [1975] 2 All ER 282 that in rebutting an alleged statement made ‘without prejudice’, it is quite proper for the other party to supply contrary facts in the event that the court decides that there is no privilege. So it is. But, again, this statement has no application to the facts of the instant case. In Sobell v Boston [1975] 2 All ER 282, Sobell, in support of his claim, had referred in his affidavit to a statement as having been made by Boston in a discussion between themselves in connection with their partnership dispute, the subject matter of the action. Boston filed an affidavit in reply, giving his own version of the discussion, and also stating that Sobell had agreed

 

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that the whole discussion was without prejudice. Sobell contended that Boston had waived his privilege by letting in evidence in his affidavit in reply. Goff J held that there was no waiver of privilege. He reasoned as follows:

 

[Boston’s] affidavit could not, in my judgment, of itself be a waiver. Where the evidence is given by affidavit the opposing party is faced with a dilemma. If he says, merely, ‘I am advised that this is

 

inadmissible and I need not answer it’, then if the objection is overruled he must seek an adjournment which may not be allowed or only on adverse terms as to costs and if he does not or if his application be not granted, he will be left with no evidence on his side. I cannot think that the privilege can be waived by an affidavit which says, ‘I object that my opponent’s affidavit is inadmissible because the matter it contains is privileged, but in any case should the evidence be received, I say it is wrong, and this is my version.

 

In the case before us, it was the defendant who sought to introduce evidence of alleged negotiations between the plaintiffs and IG, through JK, which were admittedly privileged from disclosure without the consent of the plaintiffs. They, following Sobell v Boston [1975] 2 All ER 282, could have objected to this evidence being admitted and at the same time filed an affidavit giving their own version of the negotiations. But they did not do it in that manner. What they did was to waive their privilege, if any, in respect of the negotiations and at the same time gave their own version of what the negotiations were about. If the plaintiffs’ version of the negotiations was the truth, then the relevant issue would be whether the defendant had opened the door to disclosure by adducing evidence of an untrue version of such negotiations.

 

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In Sobell v Boston [1975] 2 All ER 282, there was no dispute as to the nature of the discussions and the parties thereto. Here, there is a dispute as to the nature of the negotiations and the parties thereto. This difference was the key to the resolution of this appeal. If a party to an action seeks to adduce in evidence without prejudice negotiations with the other party, the other party is entitled to either object to such evidence being admitted or allow it to be admitted and/or giving his own version of the negotiations. In the latter case, the evidence becomes admissible because there is a waiver of privilege by both the parties. Accordingly, where, as here, there is a dispute on whether the negotiations referred to by the defendant are the same negotiations as claimed by the plaintiffs, the court must first resolve this preliminary issue of fact. If the plaintiffs’ version is true, it is our view that the privilege from disclosure has been waived by the defendant by his adducing an untrue version thereof in evidence. If the defendant’s version is true, then the question arises whether the second set of negotiations is subject to privilege. ”

 

(emphasis added); and

 

(e) in deciding whether “without prejudice” negotiations is admissible as evidence or otherwise, the court may peruse the evidence in question – Wong Nget Thau, at p. 734, and Boss, at p. 517.

 

90. Firstly, after perusing the Respondents’ Transcript as well as Mr. Muralee’s Transcript (as explained in Wong Nget Thau and Boss), I am satisfied that the discussion in the Meeting on 6.9.2011 constituted “without prejudice” negotiations which fulfil the 2 conditions for the exclusion of such evidence as explained in Dusun Desaru Sdn Bhd –

 

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(a) there was already a dispute between the Petitioner and 3rd Respondent before the Meeting on 6.9.2011 and such a dispute led the 3rd Respondent and Mr. Muralee (as the Petitioner’s A&S) to negotiate with one another at the Meeting on 6.9.2011; and

 

(b) the negotiations between the 3rd Respondent and Mr. Muralee at the Meeting dated 6.9.2011, contained suggested terms that would finally lead to the settlement of the dispute between the Petitioner and 3rd Respondent.

 

91. Secondly, this court is satisfied that there is a tacit understanding between the Petitioner and Mr. Muralee on the one part with the 3rd Respondent on the other part, that the entire discussion in the Meeting on 6.9.2011 should not be admitted as evidence within the meaning of the second limb of s 23 EA (as explained in Ng Chuan Seng and Rush & Tompkins Ltd). If there was no such implied understanding, Mr. Muralee would not have met the 3rd Respondent in the Meeting on

 

6.9.2011. Similarly, the 3rd Respondent would not have gone to Mr. Muralee’s office for the Meeting on 6.9.2011 if there was no implied agreement on the 3rd Respondent’s part that all the negotiations which took place at the Meeting on 6.9.2011, would not be admitted as evidence if there was no subsequent settlement of the dispute between the Petitioner and 3rd Respondent.

 

92. Thirdly, I am not persuaded that the Petitioner has waived his right to object to the evidence adduced by the Respondents regarding the

 

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Meeting on 6.9.2011 (including the Respondents’ Transcript). I decide as such for the following reasons:

 

(a) in response to the Respondents’ 1st Affidavit which adduced “without prejudice” negotiations at the Meeting on 6.9.2011, paragraph 100 of the Petitioner’s second affidavit affirmed on 7.8.2012 (in English), averred as follows (with grammatical and spelling errors) (Paragraph 100) –

 

“Paragraph 94 of the [Respondents’ 1st Affidavit] [concerning the Meeting on 6.9.2011] is a big lie. Muralee who was acting as my solicitor in the negotiation for the buy-out acted as my negotiator and mediator with my mandate in the without prejudice meeting held on 6.9.2011 in trying to reach an amicable settlement between me and the 3rd Respondent. The 3rd Respondent and his brother Thomas George clandestinely recorded the without prejudice meeting without the knowledge of Muralee. The entire CD Recording and transcript exhibited therein are privilege [sic] and without prejudice documents and should be expunge [sic]. I repeat paragraph 71 above. I shall also refer to the Notes of Proceedings in the [Conspiracy Suit] particularly to the crossexamination of the 3rd Respondent and Thomas George at the hearing proper of this Petition.”

 

(emphasis added).

 

Paragraph 100 does not amount to a waiver by the Petitioner to the admission of “without prejudice” negotiations at the Meeting on 6.9.2011; and

 

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(b) Paragraph 100 has been described by Goff J (as he then was in the English High Court case of Sobell v Boston & Ors [1975] 2 All ER 282, at 287, as “I object that my opponent’s affidavit is inadmissible because the matter it contains is privileged, but in any case should the evidence be received, I say it is wrong, and this is my version”. Sobell has been approved by the Singapore Court of Appeal in Lim Tjoen Kong. I accept Sobell because for a party to waive his or her right to object to the admissibility of “without prejudice” negotiations, the waiver must be clear and unequivocal. Paragraph 100 is not a clear and unequivocal waiver of the Petitioner’s right to object to the admission of the “without prejudice” discussion at the Meeting on

 

6.9.2011. The need for a clear and unequivocal waiver is understandable in view of the public policy considerations supporting the need to protect “without prejudice” negotiations. I must clarify that there may be a clear and unequivocal waiver by a party’s conduct or which can be inferred from the circumstances of the case in question. This is however not the case here.

 

93. Premised on the above reasons, I am constrained to exclude all evidence regarding the “without prejudice” negotiations at the Meeting on

 

6.9.2011.

 

Q6. Admissibility of Encik Shukri’s Report

 

94. The Petitioner’s learned counsel has submitted that Encik Shukri’s Report should not be admitted as evidence in this case for the following reasons:

 

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(a) the Petitioner had placed an envelope containing the BlackBerry and Laptop in the Courier Bag which was sealed and marked “Only To Be Opened In My Presence!” by the Petitioner. The Courier Bag was then given by the Petitioner to the 3rd Respondent. The Courier Bag was opened in the absence of the Petitioner. The contents of the BlackBerry and Laptop had been extracted and analysed without the knowledge of the Petitioner. As such, the Petitioner alleges that there has been a break in the chain of evidence regarding the BlackBerry and Laptop;

 

(b) there has been a tampering of the contents of the BlackBerry and Laptop by the Respondents;

 

(c) there is no evidence from the relevant mobile telephone service provider to prove –

 

(i) who are the registered users of the mobile telephone numbers stated in the Extracted Information; and

 

(ii) the “Short Message Service” (SMS) referred in the Extracted Information, have indeed been sent by use of the BlackBerry and received via the BlackBerry; and

 

(d) Encik Shukri’s Report was only prepared on 16.5.2013. As such, there had been a long delay in the preparation of Encik Shukri’s Report.

 

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95. I am of the view that the Respondents’ above contentions do not bar the admissibility of Encik Shukri’s Report. My decision is based on the following reasons:

 

(a) the Respondents’ above submission goes to the weight and not the admissibility of Encik Shukri’s Report. It is trite law that the question of admissibility of evidence is to be distinguished from its weight. I cite my earlier decision in Tenaga Nasional Berhad v Api-Api Aquaculture Sdn Bhd [2015] 3 AMR 811, at 828-830, as follows –

 

“G. Relevancy, admissibility and weight of evidence

 

[24] Before the 2 Evidential Questions are resolved, I wish to state my own understanding of the EA and cases on EA regarding relevancy, admissibility and weight of evidence as follows:

 

(b) s 5 EA provides that “evidence” (defined widely in s 3 EA) may be given of –

 

(i) the existence or non-existence of “fact in issue”. Section 3 EA defines a “fact in issue” as “any fact from which, either by itself or in connection with other facts, the existence, nonexistence, nature or extent of any right, liability or disability asserted or denied in any suit or proceeding necessarily follows”. The phrase of

 

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“fact in issue” has been explained by Ong Hock Thye FJ (as his Lordship then was) in the Federal Court case of How Paik Too v Mohideen [1968] 1 MLJ 51, at 52; and

 

(ii) every fact “as are hereinafter declared to be relevant”, namely a fact which is relevant under ss 6 to 55 (contained in Chapter 2 EA which is entitled “Relevancy of facts”). Section 3 EA explains that a fact is relevant when “one fact is said to be relevant to another when the one is connected with the other in any of the ways referred to in the provisions of [EA] relating to the relevancy of facts”;

 

(c) s 5 EA is exhaustive as it is stated in s 5 EA that only evidence regarding facts in issue and relevant facts may be given. This is clear from the words “and of no others” in s 5 EA. In Public Prosecutor v Haji Kassim [1971] 2 MLJ 115, at 115, Ong Hock Thye CJ (Malaya) held in the Federal Court as follows –

 

(d) s 5 EA does not provide for admissibility of evidence. The opening words in s 5 EA provides that “Evidence may be given” of facts in issue and relevant facts. Courts still retain a discretion to admit or not evidence of facts in issue and relevant facts. This is clear from the Federal Court’s judgment given by Richard Malanjum CJ (Sabah and Sarawak) in Formosa Resort Properties Sdn Bhd v Bank Bumiputra Malaysia Bhd [2010] 2 AMR 807, at 811, as follows –

 

“Whilst it is trite law that all admissible evidence are relevant evidence, the

 

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converse is not necessarily true. Although a piece of evidence may be relevant it may be inadmissible for various reasons such as it is hearsay evidence or its prejudicial effect outweighs its probative value.”

 

(emphasis added).

 

The court’s power to admit relevant facts is also provided in s 136(1) and (2) EA as follows –

 

(e) even if a piece of evidence, be it a fact in issue or a relevant fact, is admitted, the court may still attach no weight to such evidence. In Ng Chooi Kor v Isyoda (M) Sdn Bhd [2010] 3 MLJ 492, at 498 and 499-505, the Court of Appeal in a judgment given by Ahmad Maarop JCA (as his Lordship then was), did not give any weight to a statutory declaration and affidavit, both affirmed by one person who had not been called as a witness to testify in that case.”; and

 

(b) save for legally privileged communications between the Petitioner and Mr. Muralee (which has been excluded as evidence by this court in Part Q3 of this judgment), Encik Shukri’s Report is clearly relevant to this case in view of the Respondents’ allegations regarding, among others, the Petitioner’s Grand Plan and conspiracy by the Alleged Conspirators.

 

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96. I will assess the weight to be given to Encik Shukri’s Report (excluding legally privileged communication between the Petitioner and Mr. Muralee) later in this judgment.

 

R. Is there a quasi-partnership in this case?

 

97. The issue that now arises is whether the Companies in this case are “quasi-partnership companies” as understood in Pan Pacific Construction Holdings Sdn Bhd and Lim Swee Khiang.

 

98. In deciding the above question, the circumstances in which a plaintiff in a Section 181 Action becomes a member of the company in question, is important to determine what are his or her “legitimate expectations” concerning the company – Kitnasamy, at paragraph 29.

 

99. I am satisfied that in this case the Petitioner has proven on a balance of probabilities the Companies are “quasi-partnership companies” wherein the Petitioner and 3rd Respondent are the only equal “partners”. This decision is premised on the following evidence and reasons:

 

(a) both the Petitioner and 3rd Respondent are qualified engineers who met each other in ALSTOM Asia Pacific and “teamed up” to work together for mutual profit when the 1st Respondent first managed to secure the Malakoff Contract. The synergy between the Petitioner and 3rd Respondent in the Companies clearly supports the true nature of the Companies as “quasi-partnership companies”. The

 

surrounding circumstances on how the Petitioner and 3rd

 

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Respondent met each other in ALSTOM Asia Pacific and their mutual decision and conduct to work together as “partners”, is clearly relevant according to Guan Teik Sdn Bhd and supports the inference that only the Petitioner and 3rd Respondent are equal “partners” in the Companies;

 

(b) even before the execution of the 2 Trust Deeds, on 5.10.2004, Madam Thomas (3rd Respondent’s wife) had transferred her 1 share in the 1st Respondent to the Petitioner by way of Form 32A dated 5.10.2004. After such a transfer, the Petitioner and 3rd Respondent were the only shareholders of the 1st Respondent with 1 share each. As early as 5.10.2004, the 1st Respondent is a “quasi-partnership company’ wherein the Petitioner and 3rd Respondent are equal “partners”;

 

(c) the Petitioner and 3rd Respondent formed a joint venture company named Innotec Asia Pacific (now named Jacob & Toralf Consulting) to work together with Innotec. Such a conduct of the Petitioner and 3rd Respondent which is relevant under s 8(2) EA (please see Tindok Besar Estate Sdn Bhd), is consistent with the “quasipartnership” between the Petitioner and 3rd Respondent. In fact, the name of Jacob & Toralf Consulting itself evidences such a “quasipartnership”;

 

(d) in Part P of this judgment, I have found the 2 Trust Deeds to be valid and enforceable. The 2 Trust Deeds are contemporaneous documents which clearly showed that there are only 2 beneficial and equal owners of the shares in the Companies, namely the Petitioner and 3rd Respondent. As held in Guan Teik Sdn Bhd and Saminathan, contemporaneous documents should be favoured over oral evidence and mere allegations in affidavit evidence.

 

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I attach great weight to the 2 Trust Deeds due to the following circumstances –

 

(i) the 2 Trust Deeds have been executed on the same day (16.12.2009) and their wording is similar. This clearly indicates that both Companies are in fact “quasi-partnership companies”; and

 

(ii) the 2 Trust Deeds have been signed by the Petitioner, 3rd and 4th Respondents in the presence of the 3rd Respondent’s brother, Mr. Thomas George. Mr. Thomas George accompanied the 3rd Respondent to negotiate with Mr. Muralee in the Meeting on 6.9.2011. As such, the 3rd Respondent trusted and relied on Mr. Thomas George. The fact that Mr. Thomas George witnessed the signing of the 2 Trust Deeds by the Petitioner, 3rd and 4th Respondents, shows the importance of the 2 Trust Deeds to the Petitioner and 3rd Respondent;

 

(e) after the execution of the 1st Trust Deed (1st Respondent) –

 

(i) both the Petitioner and 3rd Respondent executed 2 Forms 32A dated 29.1.2010 to transfer their shares in the 1st Respondent to their trustee, the 4th Respondent. The execution of the 2 Forms 32 dated 29.1.2010 on the same day by the Petitioner and 3rd Respondent, cannot be co-incidental and supports the inference that 1st Respondent is a “quasi-partnership company’ which belongs to the Petitioner and 3rd Respondent; and

 

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(ii) the 4th Respondent executed the Security Documents (1st Respondent) to “assure” the Petitioner and 3rd Respondent that the 4th Respondent was only a trustee for both the Petitioner and 3rd Respondent;

 

(f) after the execution of the 2nd T rust Deed (2nd Respondent) –

 

(i) the 4th Respondent signed Form 32A dated 22.12.2009 to transfer 52,500 shares in the 2nd Respondent held by the 4th Respondent, to the 1st Respondent as the holding company of the 2nd Respondent. Such an act by the 4th Respondent was clearly consistent with the intention of the Petitioner, 3rd and 4th Respondents as embodied in the 2nd Trust Deed (2nd Respondent); and

 

(ii) the 4th Respondent signed the Security Documents (2nd Respondent) to confirm that the 4th Respondent was only a trustee for both the Petitioner and 3rd Respondent;

 

(g) the Petitioner and 3rd Respondent mutually agreed to the subsequent restructuring of the Companies whereby the Petitioner was appointed the 2nd Respondent’s CEO on 15.10.2009 while the 3rd Respondent concentrated on the 2009 Suit (Mutual Agreement). The Mutual Agreement is proved by the following emails –

 

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(i) the 3rd Respondent’s email dated 19.3.2011 to the Petitioner (3rd Respondent’s Email dated 19.3.2011) stated, among others, as follows (with grammatical errors) –

 

“Dear Toralf,

 

I feel the approach is for the preparation of the documents should be part of the Business Development process and activity. You may need to set up a team consisting of Business Development, finance and operation team members to provide the input and BD to take the lead to put the document together. As you know it would be quite difficult for me to give input after not being directly and actively involved in the running of the business. As agreed I shall stay out of the business operations and leave it to the management. Any decision you need from me as a director and shareholder I shall extend to you.”

 

(emphasis added); and

 

(ii) the Petitioner’s email dated 20.3.2011 to the 3rd Respondent (Petitioner’s Email dated 20.3.2011). The Petitioner’s Email dated 20.3.2011 stated, among others (with grammatical errors)

 

“Dear Jacob,

 

Yes, we agreed that:

 

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• I am running [2nd Respondent] as the CEO (and you shall “stay out of the business operations and leave it to the management” as you mentioned below) you are the Chairman of the Board

 

• You are focusing on the legal activities related to our case and being the CEO of [1st Respondent] (and I am staying out of these activities)

 

That is and was our understanding of our roles!”

 

(emphasis added).

 

The 3rd Respondent has not denied the Mutual Agreement in any contemporaneous document. The Mutual Agreement is consistent with the true nature of the Companies as “quasi-partnership companies”;

 

(h) the 3rd Respondent sent an email dated 20.3.2011 to the Petitioner (3rd Respondent’s Email dated 20.3.2011) which stated, among others (with grammatical and spelling errors) –

 

“Dear Toralf,

 

I am out with my family now. Will reply you [sic] mail later today. There seems to be misunderstanding and confusion

 

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regarding business/company responsibility.

 

structure/roles

 

&

 

The one thing that we both don’t disagree is that the ultimate and de-facto owners of all the ALCIM companies and it’s [sic] businesses is [sic] TMU & JGE. . . .”

 

(emphasis added).

 

The 3rd Respondent’s Email dated 20.3.2011 amounts to an admission by the 3rd Respondent that the Companies are in fact “quasi-partnership companies” wherein the Petitioner and 3rd Respondent are the only equal “partners”. Such an admission is relevant under ss 17(1) and 18(1) EA. Sections 17(1) and 18(1) EA provide as follows –

 

“Admission and confession defined

 

17(1) An admission is a statement, oral or documentary, which suggests any inference as to any fact in issue or relevant fact, and which is made by any of the persons and under the circumstances hereinafter mentioned.

 

Admission by party to proceeding, his agent or person interested

 

18(1) Statements made by a party to the proceeding or

 

by an agent to any such party whom the court regards under the circumstances of the case as expressly or impliedly authorized by him to make them are admissions ”

 

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(emphasis added).

 

In Teh Eok Kee & Anor v Tan Chiah Hock & Anor [1995] 3 MLJ 613, at 627, Edgar Joseph Jr FCJ gave the following judgment of the Federal Court –

 

“It is clear law, that not only admissions made personally by the party, but also admissions by those in privity with the party are admissible, as exceptions to the hearsay rule.

 

The most important examples of those in privity are predecessors in title, referees, and servants or agents acting within the scope of their authority. (See s 18(1) of the Evidence Act 1950.)

 

Evidence of these admissions was also admissible on the broader ground that if a party to a civil suit says that he does not dispute the truth of a fact, the court will not require the opposite party to prove such fact ”

 

(emphasis added).

 

I place a lot of weight on the 3rd Respondent’s Email dated

 

20.3.2011 due to the following reasons –

 

(i) the 3rd Respondent’s Email dated 20.3.2011 had been sent before a dispute arose between the Petitioner and 3rd Respondent; and

 

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(ii) the 3rd Respondent has not retracted or withdrawn the 3rd Respondent’s Email dated 20.3.2011 at any time;

 

(i) the 3rd Respondent’s email dated 23.3.2011 to the Petitioner (3rd Respondent’s Email dated 23.3.2011), stated, among others (with grammatical error) –

 

What in [1st Respondent] that you don’t trust and don’t have enough papers [sic]. If Zila [4th Respondent] is the problem, please nominate your candidate that you trust and the papers that will guarantee your security. …”

 

(emphasis added).

 

The 3rd Respondent’s Email dated 23.3.2011 –

 

(1) constitutes another admission by the 3rd Respondent under ss 17(1) and 18(1) EA wherein the 3rd Respondent has admitted the existence of the “quasi-partnership” and the fact that the 4th Respondent is a trustee for both the Petitioner and 3rd Respondent; and

 

(2) should be given great weight as the 3rd Respondent’s Email dated 23.3.2011 was sent before a dispute arose between the Petitioner and 3rd Respondent and had not been retracted by the 3rd Respondent at any time;

 

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(j) the Petitioner sent an email dated 1.6.2011 to the 3rd Respondent (Petitioner’s Email dated 1.6.2011). The Petitioner’s Email dated 1.6.2011 not only proved the existence of a “quasipartnership” between the Petitioner and 3rd Respondent but showed the first sign of the breakdown in this “quasi-partnership”. The Petitioner’s Email dated 1.6.2011 stated, among others (with grammatical and spelling errors) –

 

… I have decided to write this email to share with you my feelings about today’s meeting. I would like you to know that at the end and after the meeting I was really disappointed and frustrated?

 

– My disappoint [sic] is about having endless debates with no or little progress or result how to share our success with our staff (topic: Employee Share Options), note that I tried to start this discussion in 2009 as part of the shareholder agreement discussion.

 

I am frustrated having endless debates with no or little progress or result since months (years) about establishing (TMU) or not having (JGE) a Shareholder Agreement as a framework for our future and protection of our families.

 

– I am frustrated of not coming to an agreement with you regarding the expansion to the Middle East by setting up an entity decoupled from the Malaysian (Bumi) restrictions.

 

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I am still trying to find out why it is so hard for both of us to come to agreements and solutions for all this [sic] matters above?

 

Please note, that I came to meeting to get answers like:

 

1. Why you don’t want to define the % for the future ESOS (since you took out the variable “x”)

 

2. Why do you want that ALCIM S/B (a company structured to fulfil the Malaysian requirements like proxy paper, Mardina and Aimi as directors) shall own 100% of the ALCIM EMEA FZ LLC Company and why not the ALCIM Holding S/B should be the 51% Shareholder in the ALCIM EMEA FZ LLC?

 

3. Why you don’t want the provision for potential Bumi Investors (you took out the variable “y”)

 

4. Why you don’t want to set up a Holding Company in Singapore but instead having 4(!) companies incorporated in Malaysia (by end of 2012),

 

I hope we can sort out our disagreements soon, because I believe that we can only build together the success if we are in agreement (at least with the major topics).

 

I am ignoring your statement (I realized you made it twice) today “you can do want [sic] you want”, because I believe

 

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this should not be the way forward. We should find ways to made [sic] decisions together in the interest of the company. We should avoid any dead lock situation and have a common understanding and common goals.

 

I still believe that Dato (as originally proposed by you) would be the right person to help us to come to an Agreement between us as Shareholders and act as an [sic] mediator to avoid a dead lock.

 

Said this, I am open [sic] for anything which helps us to move in the right direction fast .”

 

(emphasis added);

 

(k) the 3rd Respondent sent an email dated 6.6.2011 to the Petitioner (3rd Respondent’s Email dated 6.6.2011) which stated, among others (with grammatical and spelling errors) –

 

I have spent last week since our unpleasant lunch appointment at Double Tree to look back and reassess our partnership to date based on your sentiment, thoughts and impression which was clearly reflected in your statements form your candor [sic] email from Singapore.

 

After giving a very long thought on the above matters and in the best interest of all the staff and ongoing business, I would like to offer to you to buy my full interest in the business. This will allow you to take over the business and

 

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reorganize the company with new shareholders/agreements and structure that fits with your business philosophy, plan and strategy. This would also allow you to chart the road map of the business to face both opportunities and challenges both locally and abroad in the way you see best.

 

In short I have decided to exit the business to resolve irreconcilable and fundamental differences between us which I strongly feel is unfavorable [sic] and a major hinderance [sic] to the business project and growth.

 

Therefore please take this email as a notice from me to you giving you the right of first refusal to make an offer to buy my shareholding in our business.

 

Please consider my offer seriously and look forward to meet and discuss the details with you when you are back in KL. … ”

 

(emphasis added).

 

The 3rd Respondent’s Email dated 6.6.2011 is most significant. Firstly, the 3rd Respondent’s Email dated 6.6.2011 constitutes a third admission under ss 17(1) and 18(1) EA by the 3rd Respondent of a “quasi-partnership” between the Petitioner and the 3rd Respondent.

 

Secondly, the 3rd Respondent’s Email dated 6.6.2011 disproves the Respondents’ averments that –

 

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(1) the 2 Trust Deeds and Security Documents have been requested by the Petitioner to provide “comfort’ to the Petitioner in the event that anything should happen to the 4th Respondent; and

 

(2) if the 4th Respondent’s Shares “revert’ to the Petitioner and 3rd Respondent, the Petitioner and 3rd Respondent would compensate the 4th Respondent

 

(Respondents’ Allegations concerning 4th Respondent’s Shares).

 

If the Respondents’ Allegations concerning 4th Respondent’s Shares were true, the 3rd Respondent would have referred to these allegations in the 3rd Respondent’s Email dated 6.6.2011. This is because the 3rd Respondent has clearly stated in the 3rd Respondent’s Email dated 6.6.2011, his intention to exit the Companies by giving the Petitioner the first right to buy the 3rd Respondent’s Shares. The fact that the 3rd Petitioner was prepared to leave the Companies by only selling the 3rd Respondent’s Shares to the Petitioner without making any reference to the 4th Respondent’s Shares, casts grave doubt on the truth regarding the Respondents’ Allegations concerning 4th Respondent’s Shares.

 

The 3rd Respondent’s 4 Options (given by the 3rd Respondent to the Petitioner on 20.6.2011 in the presence of, among others, the 4th Respondent) did not refer at all Respondents’ Allegations concerning 4th Respondent’s Shares. In any event, the Respondents

 

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have not adduced any documentary evidence to substantiate the Respondents’ Allegations concerning 4th Respondent’s Shares;

 

(l) in the Petitioner’s 3 emails dated 9.3.2011, 13.3.2011 and 19.3.2011 to the 3rd Respondent, the Petitioner has addressed the 3rd Respondent as the Petitioner’s “partner’. The 3rd Respondent has not denied such a fact in any of the 3rd Respondent’s replies to these emails from the Petitioner;

 

(m) after the 3rd Respondent’s Email dated 6.6.2011 has been sent, only the Petitioner and 3rd Respondent negotiated at length regarding the buy-out of shares in the Companies (so as to part ways amicably). In fact, in the Meeting on 20.6.2011, the 3rd Respondent admitted giving the 3rd Respondent’s 4 Options to the Petitioner so as to resolve the deadlock in their “quasi-partnership”. Such a conduct by the Petitioner and 3rd Respondent, clearly support the inference that the Companies are “quasi-partnership companies” wherein the Petitioner and 3rd Respondent are the only equal “partners”;

 

(n) the exchange of emails between the Petitioner and 3rd Respondent regarding “Proposed new ALCIM Group Structure” (emails dated

 

9.3.2011 from the Petitioner until the 3rd Respondent’s email dated 23.3.2011) showed that only the Petitioner and 3rd Respondent discussed major decisions concerning the Companies. Such an exchange of emails supports the inference that the Companies are “quasi-partnership companies”; and

 

(o) the above evidence and reasons clearly support the probability that both Companies are “quasi-partnership companies” with the

 

Petitioner and 3rd Respondent as equal “partners”. Any other

 

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inference is improbable. In Muniandy and Dr. Shanmuganthan, the probabilities or improbabilities of the matter in question, should be considered by the court.

 

S. 1st, 2nd, 7th, 8th and 10th Grievances

 

100. In Jet-Tech Materials Sdn Bhd, at p. 302-303, the Federal Court decided as follows:

 

“(ii) The Appointment And Removal Of Gan And Firdaos As Directors Of The Company

 

[37] It was alleged by the appellants that Yushiro’s conduct in refusing to allow Chen to remove Gan and Firdaos as directors of the company amounted to a breach of the shareholders agreement. In this regard we are in agreement with the submission of learned counsel for the respondents that breaches of a shareholders agreement cannot be a basis for bringing a petition under s. 181. A complaint under s.

 

181 of the CA must be confined to matters relating to the affairs of the company. Shareholders’ agreement and breach of the same clearly are not matters relating to the affairs of the company. They are private matters enforceable by the parties to the shareholders agreement. (see Beh Chun Chuan v. Paloh Medical Centre Sdn Bhd & Ors [1999] 7 CLJ 1, Tuan Haji Ishak Ismail v. Leong Hup Holdings Bhd & 5 Other Appeals

 

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[1996] 1 CLJ 393 and Russel v. Northern Bank Development Corp Ltd [1992] BCLC 1016).

 

(i\\) The Removal Of Chen As The Managing Director Of The Company

 

[38] The relevant question here is whether Chen was removed as the Managing Director of the company? In this regard the Court of Appeal concluded and held that:

 

On 21 December 2004, the Petitioners presented this Petition. It is clear to us that at the point when the Petitions was presented,

 

Chen still remained on the Board of Directors of the Company. It is also quite clear to us that Gan and Firdaos whom Chen claimed to be nominees of his (and therefore tasked with protecting the interest of Jet-Tech, his alter ego, on the Board of Directors of the Company) were still on that Board.

 

Clearly therefore the interest of Jet-Tech was still well represented on the Board of Directors of the Company. It could not therefore be said that Jet-Tech, the member (as opposed to Chen, who was not) had been excluded from the management of the Company, even if Chen was no longer on the Board of the Company.

 

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In the circumstances, we are not able to agree with the contention that there had been a deprivation or denial of the legitimate expectation of the rightful Petitioner here (namely Jet-Tech) in the Ebrahimi sense, or in any other sense, to participate in the management of the Company.

 

We agree with the above view. In any event Yushiro’s request to Chen to retire as a director of the company does not fall within the scope of s. 181 of the CA. This complaint is confined to the status of Chen as a Managing Director, not as a shareholder of the company. Such request cannot be termed as “oppression” within the meaning of s. 181 of the CA. In Soh Jiun Jen v. Advance Colour Laboratory Sdn Bhd & Ors [2010] 4 CLJ 897 at 907, the Court of Appeal held:

 

If the petitioners relies on sub-s (1)(a) of s. 181, there must be shown the element of ‘oppression’ or ‘disregard’. It must involve, at least, an element of lack of probity or fair dealing to a member against his right as member or shareholder. Oppression or disregard of interest of a director of a company clearly does not come under the ambit of s. 181…

 

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We endorse the above view.

 

(emphasis added).

 

101. In Part M of this judgment, this court has decided that the Respondents are estopped from asserting that the Petitioner cannot file this Section 181 Action on the ground that the Petitioner is not a shareholder of the 2nd Respondent. As such, this judgment will discuss the Petitioner’s rights as a member of the 1st Respondent only.

 

102. According to Pan Pacific Construction Holdings Sdn Bhd and Jet-Tech Materials Sdn Bhd, a mere breach of the 2 Trust Deeds and/or any legitimate expectation of the Petitioner by the 3rd and/or 4th Respondent, in itself, does not amount to “commercial unfairness” which has adversely affected the Petitioner as 1st Respondent’s shareholder within one or more of the 4 Categories.

 

103. The 8th Grievance concerns the refusal of the 3rd and 4th Respondents to recognise the 2 Trust Deeds while the 10th Grievance alleges that the 3rd Respondent has breached the 2 Trust Deeds. In my view, the 8th and 10th Grievances involve breaches of the 2 Trust Deeds by the 3rd and 4th Respondents which –

 

(a) adversely affect the Petitioner’s rights as a co-beneficiary of the 2 Trust Deeds; and

 

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(b) do not adversely affect the Petitioner’s rights as a shareholder of the 1st Respondent.

 

Accordingly, based on Pan Pacific Construction Holdings Sdn Bhd and Jet-Tech Materials Sdn Bhd, the 8th and 10th Grievances do not constitute “commercial unfairness” to the Petitioner within one or more of the 4 Categories.

 

104. The 1st Grievance avers that the 3rd Respondent has threatened to wind up the Companies. Once again, guided by Pan Pacific Construction Holdings Sdn Bhd and Jet-Tech Materials Sdn Bhd, such a threat by the 3rd Respondent may have breached the 2 Trust Deeds which adversely affects the Petitioner as a co-beneficiary of the 2 Trust Deeds but does not adversely affect the Petitioner’s rights as the 1st Respondent’s shareholder.

 

105. The 2nd Grievance alleges that the 3rd and 4th Respondents have failed to stop payment of RM672,000 by the 2nd Respondent to the 1st Respondent for “Technical Advisory Services” which has not been provided by the 1st Respondent to the 2nd Respondent (Payment of RM672,000). The thrust of the 2nd Grievance is that the 3rd and 4th Respondents, as the 2nd Respondent’s directors, have breached their fiduciary and statutory duties owed by the 3rd and 4th Respondents to the 2nd Respondent in failing to stop the Payment of RM672,000. The 7th Grievance avers that the 3rd and 4th Respondents have dissipated Companies’ funds. In my view, the 7th Grievance concerns breaches of

 

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fiduciary and statutory duties owed by the 3rd and 4th Respondents to the Companies. I am of the opinion that the 2nd and 7th Grievances adversely affect the Companies and do not adversely affect the Petitioner as a member of the 1st Respondent. As held in Pan Pacific Construction Holdings Sdn Bhd and Jet-Tech Materials Sdn Bhd, an act or omission is only actionable under s 181 CA if the act or omission adversely affects the plaintiff in a commercially unfair manner as a shareholder of the company in question. The Federal Court decided in Koh Jui Hiong, at p. 444, that s 181 CA would have been abused if the nature of the complaint is misconduct rather than mismanagement.

 

106. Premised on the above reasons, I am not able to find that the 1st, 2nd, 7th, 8th and 10th Grievances, individually or cumulatively, constitute “commercial unfairness” to the Petitioner under s 181 CA which has adversely affected the Petitioner as a shareholder of the 1st Respondent within one or more of the 4 Categories.

 

T. 3rd to 6th and 9th Grievances

 

107. As explained above, the Companies are “quasi-partnership companies”. According to Pan Pacific Construction Holdings Sdn Bhd, the Petitioner can only succeed in this case if the Petitioner can prove on a balance of probabilities –

 

(a) the 3rd Respondent has breached his fiduciary duties owed to the

 

Petitioner as a “partner’ in the “quasi-partnership companies”; and

 

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(b) the 3rd Respondent’s breach of fiduciary duties owed to the Petitioner, constitutes “commercial unfairness” to the Petitioner within one or more of the 4 Categories.

 

108. In Lim Swee Khiang, the Singapore Court of Appeal has held that a higher standard of corporate governance is required in “quasipartnership companies”.

 

T1. 3rd Grievance

 

109. The 3rd Grievance alleges that the 3rd and 4th Respondents have taken steps to oust the Petitioner from the management of the Companies by having a hostile “takeover’ of the Companies.

 

110. I find that the Petitioner has succeeded to prove on a balance of probabilities the 3rd Grievance. This decision is premised on the following evidence and reasons:

 

(a) the Mutual Agreement (stated in the 3rd Respondent’s Email dated

 

19.3.2011 and the Petitioner’s Email dated 20.3.2011), provided for the Petitioner to manage the 2nd Respondent as its CEO while the 3rd Respondent would concentrate on the 2009 Suit. Pursuant to the Mutual Agreement, the Petitioner had been running the 2nd Respondent as its CEO.

 

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The 2nd Respondent’s BOD Meeting dated 15.8.2011 was called by way of a notice dated 5.8.2011 (2nd Respondent’s BOD Notice dated 5.8.2011). The 2nd Respondent’s BOD Notice dated 5.8.2011 stated the following agenda (with grammatical error) –

 

“AGENDA

 

1. To read the Notice of the Meeting.

 

2. To discuss and review of [sic] Performance of the [2nd Respondent].

 

3. To discuss any other matters .”

 

(emphasis added).

 

The 2nd Respondent’s BOD Notice dated 5.8.2011 did not expressly state that the 3rd Respondent would be appointed as the 2nd Respondent’s executive chairman. Nor did the 2nd Respondent’s BOD Notice dated 5.8.2011 expressly require the Petitioner to present to the 2nd Respondent’s BOD a comprehensive review of the financial performance of the 2nd Respondent (Financial Briefing).

 

1 find that the 2nd Respondent’s BOD Notice dated 5.8.2011 lacks sufficient particulars to give adequate notice to the Petitioner that the Petitioner is required to give the Financial Briefing at the 2nd Respondent’s BOD Meeting dated 15.8.2011. I rely on the following

 

2 High Court cases –

 

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(i) Ajaib Singh J’s (as he then was) judgment in Florence Bailes v Dr Ng Jit Leong [1985] 1 MLJ 374, at 380, as follows –

 

“There was yet another error in the proceedings of the committee meeting which in my view rendered the unanimous decision of the committee invalid. The agenda which also served as a notice of the meeting listed out a number of topics which were scheduled to be discussed on May 22, 1981. It was however not stated in the agenda that the conduct of Mrs. Bailes as contained in the allegation of Madam Teoh was to be discussed and possible action taken against her under rule 51(i). Madam Teoh’s complaint came up for discussion under item 7(g) of the agenda which merely states “Discipline, Staff, Rules and Bye-laws.”

 

The committee was in the process of taking drastic action against Mrs. Bailes. It was of the utmost importance that the agenda should have stated the object of the meeting insofar as Mrs. Bailes, position was concerned with sufficient particularity. The minutes of the meeting show that seven committee members were present including the president and Mr. Charles Ong. Seven others are stated to have been absent with apologies and one committee member is shown as being on leave. The committee member who did not attend the meeting were clearly deprived of their right to know exactly what was to be discussed at the meeting concerning Mrs. Bailes and deprived also of the right to express their views on the matter which may well have been favourable to Mrs. Bailes. The failure to give sufficient particulars in the agenda for the discussion of Mrs. Bailes’ conduct rendered the unanimous decision of the committee invalid. Young v Ladies’ Imperial Club Ltd (1723) 1 Stra 557 567; 93 ERKB 698 704.”

 

(emphasis added); and

 

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(ii) lan HC Chin J’s decision in Lee Nyuk Heng & Anor v Pembangunan Ladang Hassan Sdn Bhd & Ors [2003] 8 CLJ 237, at 248;

 

(b) besides not being giving sufficient notice that the Petitioner was required to give the Financial Briefing at the 2nd Respondent’s BOD Meeting dated 15.8.2011, there was another objectionable aspect regarding the conduct of the 2nd Respondent’s BOD Meeting dated

 

15.8.2011. At the 2nd Respondent’s BOD Meeting dated 15.8.2011, the Petitioner requested for Cik Harynah, the 2nd Respondent’s Finance and Accounts Manager, to give the Financial Briefing but such a reasonable request was rejected by, among others, the 3rd and 4th Respondents acting as the 2nd Respondent’s directors. Worse still, Cik Harynah was present on 15.8.2011 but was refused permission to attend the 2nd Respondent’s BOD Meeting dated

 

15.8.2011. There was nothing objectionable to Cik Harynah giving the Financial Briefing as the Petitioner was still responsible for the 2nd Respondent’s financial performance as its CEO. More importantly, the 2nd Respondent’s BOD is entitled, if not duty bound, to know the actual financial position of the 2nd Respondent, irrespective of who presents the Financial Briefing;

 

(c) I find that the lack of particulars in the 2nd Respondent’s BOD Notice dated 5.8.2011 and the refusal by the 3rd and 4th Respondents to allow Cik Harynah to give the Financial Briefing at the 2nd Respondent’s BOD Meeting dated 15.8.2011, are dubious means carried out by the 3rd and 4th Respondents –

 

(i) to paint the Petitioner in bad light in the 2nd Respondent’s BOD Meeting dated 15.8.2011, namely to support the trumped-up

 

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allegation that the Petitioner has mismanaged the 2nd Respondent; and

 

(ii) the false allegation regarding the Petitioner’s mismanagement of the 2nd Respondent, was then exploited by the 3rd and 4th Respondents to “justify’ the appointment of the 3rd Respondent as the 2nd Respondent’s executive chairman at the 2nd Respondent’s BOD Meeting dated 15.8.2011;

 

(d) the appointment of the 3rd Respondent as the 2nd Respondent’s executive chairman at the 2nd Respondent’s BOD Meeting dated

 

15.8.2011 was contrary to the Mutual Agreement for the Petitioner to run the 2nd Respondent. Such a conduct of the 3rd Respondent is commercially unfair to the Petitioner in the following manner –

 

(i) the Petitioner has been deprived of his right or at least, a legitimate expectation, under the Mutual Agreement;

 

(ii) there is oppression of the Petitioner as a shareholder of the 1st Respondent who has been given the right or legitimate expectation under the Mutual Agreement to manage the 2nd Respondent; and

 

(iii) the Petitioner has been prejudiced as a shareholder of the 1st Respondent after the Petitioner has been deprived of his right or legitimate expectation to manage the 2nd Respondent pursuant to the Mutual Agreement;

 

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(e) the 3rd Respondent as the Petitioner’s “partner’ has a fiduciary duty to act in good faith towards the Petitioner – Pan-Pacific Construction Holdings Sdn Bhd. I find that the 3rd Respondent’s conduct in respect of the 2nd Respondent’s BOD Meeting dated

 

15.8.2011, has breached his fiduciary duty to act in good faith towards the Petitioner. Clearly, the 3rd Respondent’s conduct in this case, has not attained the high standard of corporate governance required in “quasi-partnership companies” as explained in Lim Swee Khiang. This breach of the 3rd Respondent’s fiduciary duty towards the Petitioner, “aggravates” the commercial unfairness committed against the Petitioner as a member of the 1st Respondent.

 

At this juncture, I must distinguish the 3rd Respondent’s fiduciary duties owed to the Petitioner as a “partner’ from the 3rd Respondent’s fiduciary and statutory duties owed to the Companies as the Companies’ director. The existence of a “partner’s” fiduciary duties to his or her other “partners” in a “quasi-partnership” (such as in this case), does not extinguish the fiduciary and statutory duties owed by a company’s director to the company and vice versa. Accordingly, the 3rd Respondent’s fiduciary and statutory duties owed to the Companies as the Companies’ director, does not affect in any manner the fiduciary duties owed by the 3rd Respondent as a “quasi-partner’ to the Petitioner; and

 

(f) the 4th Respondent, as a trustee under the 2nd Trust Deed (2nd Respondent), has breached the 2nd Trust Deed (2nd Respondent) and this has accentuated the commercial unfairness committed against the Petitioner as a member of the 1st Respondent.

 

I must reiterate what I have said in the above sub-paragraph 67(i) -as the 2nd Respondent’s director, the 4th Respondent owes fiduciary

 

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and statutory duties to the 2nd Respondent. Such fiduciary and statutory duties owed by the 4th Respondent to the 2nd Respondent, are to be distinguished from the 4th Respondent’s fiduciary duties as a trustee under the 2 Trust Deeds (which are owed to the Petitioner and 3rd Respondent as beneficiaries of the 2 Trust Deeds). This judgment cannot mean and cannot be construed to have the effect that a director can breach his or her fiduciary and statutory duties owed to the company. Conversely, a director’s fiduciary and statutory duties owed to the company, cannot extinguish the director’s fiduciary duties as a trustee under an express private trust.

 

T2. Respondents’ allegation that Petitioner had mismanaged 2nd Respondent

 

111. I reject the Respondents’ contention that the Petitioner has mismanaged the 2nd Respondent because –

 

(a) before the 2nd Respondent’s BOD Meeting dated 15.8.2011, there had been no complaint that the Petitioner had mismanaged the 2nd Respondent. The 3rd and 4th Respondents are directors of the 2nd Respondent who have full access to all the financial records and data of the 2nd Respondent. If the Petitioner had indeed mismanaged the 2nd Respondent, there would have been financial records and information to prove such a mismanagement. No documentary evidence regarding the Petitioner’s mismanagement of the 2nd Respondent, has been adduced by the Respondents in this case; and

 

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(b) as explained above, this allegation concerning the Petitioner’s mismanagement of the 2nd Respondent has been contrived by the 3rd and 4th Respondents to justify the election of the 3rd Respondent as the 2nd Respondent’s executive chairman at the 2nd Respondent’s BOD Meeting dated 15.8.2011.

 

T3. 4th Grievance

 

112. In respect of the 4th Grievance –

 

(a) the following Additional Directors had first been appointed by way of DCR’s of the Companies on 16.8.2011 –

 

(i) for the 1st Respondent – Mr. Thomas George, Cik Mardina and Mr. Louise Paul a/l Joseph Paul (Mr. Paul); and

 

(ii) for the 2nd Respondent – Mr. Paul and Cik Rafidah bt. Mat Tahir (Cik Rafidah). Cik Rafidah is the 4th Respondent’s sister;

 

(b) the Companies’ 2 DCR’s for the appointments of the Additional Directors had not been sent to the Petitioner for his approval. The Petitioner was also not informed of such appointments; and

 

(c) the Additional Directors subsequently resigned. The Companies passed another set of DCR’s dated 23.8.2011 which purportedly accepted the resignation of the Additional Directors. This set of

 

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DCR’s was also not sent to the Petitioner for his approval. Nor was the Petitioner informed of the resignation of the Additional Directors; and

 

(d) on 8.9.2011, the Additional Directors were re-appointed at the BOD meetings of the Companies (despite the Petitioner’s objection).

 

113. The importance of circulating a DCR to all directors of a company has been explained by VC George J (as he then was) in the High Court case of Chan Choon Ming v Low Poh Choon & Ors [1995] 1 CLJ 812, at 814-815, as follows:

 

“ The short question for adjudication in this case is the validity of the Art. 90 resolutions signed by a majority of the directors but with all knowledge that there were these resolutions, kept away at all relevant times, from the plaintiff.

 

Article 90 which is one of the articles under the general heading “Proceedings of Directors”, has to be read in the context of the principle that the powers conferred upon directors are conferred on them collectively as a board. In that context it is inconceivable that notice of an intended resolution of the directors need not be given to every member of the board. If upon the majority signing such a resolution it is not necessary to pass it on to the others who are present in the country there could be a situation of a company being managed, not by the board, but by a clique, no doubt consisting of the majority of the board, using Art. 90 type of resolutions and leaving the minority completely in the dark as to what is happening in and to the company. It cannot then be said that the business of the company is managed by the directors (as provided by Art. 73).

 

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In my judgment to make Art. 73 meaningful and to give effect to the collective responsibility of the board, although all that is required for an effective Art. 90 resolution is that it be signed by the majority, it must be taken as implied that every member of the board has to have the resolution circulated to him or her before it can be accepted as a directors’ resolution. Which is why in board room parlance, an Art. 90 type of resolution is usually referred to as a circular resolution. Each of the said resolutions, notice of which was not given to the plaintiff, is, in my judgment, ineffective”

 

(emphasis added)

 

114. The Petitioner, in my view, has succeeded to prove the 4th Grievance on a balance of probabilities. I decide as such based on the following evidence and reasons:

 

(a) according to Chan Choon Ming, the failure of the Company Secretary to send the DCR’s to the Petitioner, inadvertence or otherwise by the Company Secretary, invalidates the 2 sets of DCR’s (the BOD’s appointments of the Additional Directors and the BOD’s subsequent acceptance of their resignation). More importantly, the approval of the 2 sets of DCR’s by the 3rd and 4th Respondents, shows concerted efforts by the 3rd and 4th Respondents to ensure that the Petitioner is in the minority in the Companies’ BOD. It does not matter that the Additional Directors have subsequently resigned. The approval of the DCR’s by the 3rd

 

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and 4th Respondents, showed a conscious act on the part of the 3rd and 4th Respondents to control the Companies’ BOD and management;

 

(b) after the resignation of the Additional Directors due to the invalid DCR’s, the 3rd and 4th Respondents jointly caused the Companies to convene BOD meetings to re-appoint the Additional Directors and they voted at these BOD meetings to re-appoint the Additional Directors. Once again, this conduct by the 3rd and 4th Respondents shows their coordinated efforts to ensure their control the Companies’ BOD and management;

 

(c) more objectionable is the concealment from the Petitioner of the initial appointments and subsequent resignations of the Additional Directors by the 3rd and 4th Respondents. Such a concealment is more telling in view of the fact that the Additional Directors have been initially appointed on 16.8.2011, the very next day after the 2nd Respondent’s BOD Meeting dated 15.8.2011 (the subject matter of the 3rd Grievance which this court has upheld in Part T1 of this judgment).

 

(d) the appointment of the Additional Directors has breached the “quasipartnership” between the Petitioner and the 3rd Respondent. The 3rd Respondent has clearly breached his fiduciary duty to act in good faith towards the Petitioner. Once again, the 3rd Respondent’s conduct regarding the appointment of the Additional Directors, has

 

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failed to comply with the high standard of corporate governance required in “quasi-partnership companies” (please see Lim Swee Khiang). Worse still, the 3rd Respondent’s brother, Mr. Thomas George, has been appointed a director of the 1st Respondent; and

 

(e) the 4th Respondent has breached her fiduciary duties owed to the Petitioner as a trustee under the 2 Trust Deeds by –

 

(i) agreeing to the initial appointment and subsequent resignation of the Additional Directors by way of the DCR’s; and

 

(ii) voting in favour of the subsequent appointment of the Additional Directors in the Companies’ BOD meetings.

 

It is to be noted that the 4th Respondent has even agreed to the appointment of her own sister, Cik Rafidah, as an Additional Director for the 2nd Respondent.

 

It is my finding that the above conduct, especially the concealment, by the 3rd and 4th Respondents is commercially unfair to the Petitioner in the following manner –

 

(1) the Petitioner has been deprived of his right in the “quasipartnership companies” to participate as an equal “partner’ together with the 3rd Respondent in the Companies’ BOD meetings (Equal Partner’s Rights). Before the appointment of the Additional Directors, the Petitioner had Equal Partner’s

 

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Rights in the Companies together with the 3rd Respondent. With the appointment of the Additional Directors, the Petitioner has lost the Equal Partner’s Rights in the Companies; and

 

(2) the deprivation of the Petitioner’s Equal Partner’s Rights –

 

(2A) has oppressed the Petitioner as a member of the 1st Respondent;

 

(2B) has disregarded the Petitioner’s interest as a shareholder of the 1st Respondent;

 

(2C) is tantamount to unfair discrimination of the Petitioner as the 1st Respondent’s member; and/or

 

(2D) has prejudiced the Petitioner as a shareholder of the 1st Respondent.

 

115. As held above, I reject the Respondents’ allegation that the Petitioner has mismanaged the 2nd Respondent. Even if the Petitioner has mismanaged the 2nd Respondent, there is no necessity to appoint Additional Directors for the 1st Respondent. This is because there has already been the Mutual Agreement that the Petitioner would only manage the 2nd Respondent as its CEO and would not take part in the 1st Respondent’s management.

 

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T4. 5th Grievance

 

116. The 5th Grievance averred that –

 

(a) the Petitioner was removed as the 2nd Respondent’s CEO on 14.10.2011;

 

(b) the Petitioner was removed as a director of the 1st Respondent on 29.11.2011; and

 

(c) the Petitioner was removed as the 2nd Respondent’s director on 3.2.2012

 

(Petitioner’s Removal).

 

117. The Respondents have attempted to justify the Petitioner’s Removal on the following grounds:

 

(a) the 3rd Respondent objected to the Petitioner’s Proposals (among others, to set up Dubai Company and to implement the Petitioner’s Decoupling Plan which would “sever’ the 2nd Respondent from the proposed ALCIM Group of Companies to be set up by the Petitioner). The 3rd Respondent subsequently discovered the Alleged Petitioner’s Document (a document generated by the

 

Petitioner on or about 25.3.2015 and recovered from the Petitioner’s

 

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Laptop which had been encrypted to prevent access by any person other than the Petitioner) which proved the Petitioner’s Grand Plan. The Petitioner’s Grand Plan was, among others, to wrest control of the Companies and to divert the 2nd Respondent’s business which would cause the 2nd Respondent to lose the Petronas License;

 

(b) the Petitioner’s Grand Plan was put in motion in June 2011 when the Petitioner coerced the 4th Respondent to sign the Blank Share Transfer Forms (Duress Allegation). The Petitioner’s 1st and 2nd Attempts (to transfer the 4th Respondent’s Shares, appoint new directors of the Companies and effect 4th Respondent’s resignation as director of Companies) were made in furtherance of the Petitioner’s Grand Plan;

 

(c) together with Alleged Conspirators, the Petitioner conspired to –

 

(i) divert the 2nd Respondent’s business;

 

(ii) sabotage the 2009 Suit;

 

(iii) misappropriate the 2nd Respondent’s IP Rights;

 

(iv) misappropriate RM50,000 from the 2nd Respondent;

 

(v) duplicate the 2nd Respondent’s database; and

 

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(vi) defraud the Respondents

 

(Conspiracy Allegations);

 

(d) to fund new companies to be incorporated pursuant to the Petitioner’s Grand Plan, the Petitioner tried to recover the Advance To 1st Respondent by instructing Messrs JM to issue the 1st and 2nd Section 218 Notices to the 1st Respondent;

 

(e) as a director of the Companies, the Petitioner has breached his fiduciary duties owed to the Companies; and

 

(f) the Petitioner had mismanaged the 2nd Respondent.

 

118. I have already rejected the Respondents’ averment regarding the

 

Petitioner’s mismanagement of the 2nd Respondent. I have also

 

explained why fiduciary and statutory duties owed by the 3rd and 4th

 

Respondents to the Companies, cannot affect –

 

(a) the 3rd Respondent’s fiduciary duties owed to the Petitioner as a “quasi-partner’ in “quasi-partnership companies”; and

 

(b) the 4th Respondent’s fiduciary duties as a trustee under the 2 Trust Deeds.

 

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I will now turn to the Respondents’ other “justifications” for the Petitioner’s Removal.

 

T4A. No evidence to prove Petitioner’s Grand Plan

 

119. There is no clear contemporaneous documentary evidence regarding the Petitioner’s Decoupling Plan. The Respondents have alleged the existence of the Petitioner’s Decoupling Plan and this has been denied by the Petitioner. Even if the Petitioner’s Decoupling Plan were true, this did not mean that there was credible evidence to prove the Petitioner’s Grand Plan and Conspiracy Allegations (which will be discussed later in this judgment).

 

120. I am not able to find the existence and implementation of the Petitioner’s Grand Plan. This decision is based on the following evidence and reasons:

 

(a) there is nothing in the Alleged Petitioner’s Document to substantiate the Respondents’ allegation regarding the Petitioner’s Grand Plan. Nor is there any contemporaneous document to prove the Petitioner’s Grand Plan;

 

(b) the Petitioner’s Email dated 1.6.2011 showed that despite the various disagreements in the “quasi-partnership” between the Petitioner and 3rd Respondent, the Petitioner was open to further discussion. In the Petitioner’s Email dated 1.6.2011, the Petitioner even proposed mediation to resolve the “deadlock’ between the

 

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Petitioner and 3rd Respondent. The Petitioner’s Email dated 1.6.2011 and the Petitioner’s conduct, are inconsistent with the existence and implementation of the Petitioner’s Grand Plan;

 

(c) in the 3rd Respondent’s Email dated 6.6.2011, the 3rd Respondent had offered to sell the 3rd Respondent’s Shares to the Petitioner. Both the Petitioner and 3rd Respondent then negotiated on a “without prejudice” basis regarding the “buy-out’ of shares in the Companies (Buy-out Negotiations). It does not make commercial sense for the Petitioner to implement the Petitioner’s Grand Plan which will reduce the value of the Companies’ shares. Furthermore, the Petitioner’s conduct in respect of the Buy-out Negotiations negatives the existence of the Petitioner’s Grand Plan; and

 

(d) the conduct of the 3rd and 4th Respondents in this case in respect of the 3rd to 6th and 9th Grievances (I have decided above on the 3rd and 4th Grievances and will discuss the 5th, 6th and 9th Grievances later in this judgment) is consistent with the inference that the Petitioner’s Grand Plan is contrived by the 3rd and 4th Respondents to carry out the matters alleged in the 3rd to 6th and 9th Grievances.

 

T4B. Duress Allegation has not been proven

 

121. I am not able to accept the Duress Allegation due to the following evidence and reasons:

 

(a) the following contemporaneous emails corroborate the Petitioner’s averments that the 4th Respondent signed the Blank Share Transfer

 

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Forms to rectify the inconsistency between the 2 Trust Deeds and the Security Documents –

 

(i) the Petitioner’s email dated 14.6.2011 to the 3rd and 4th Respondents (Petitioner’s Email dated 14.6.2011), stated among others (with grammatical and spelling errors) –

 

“Dear [3rd and 4th Respondents],

 

Yesterday evening I studied the shareholding documents for [1st Respondent] and realized an inconsistency regarding the shared [sic] transfer between [Petitioner/3rd Respondent] and [4th Respondent]. According to the TRUST DEED the Trustee [4th Respondent] is the registered holder of 105,000 (One Hundred and Five Thousand) Shares of MYR1.00 par value. However the pre-sign [sic] and undated Resolution for Transfer of Shares says otherwise:

 

Could you please check and prepare a new set of documents [Resolution and the Forms of Transfer of Securities) in order to sign and replace the existing documents. I would appreciate, if this will be done today.”

 

(emphasis added); and

 

(ii) the 3rd Respondent replied to the Petitioner’s Email dated

 

14.6.2011 by way of an email dated 14.6.2011 (3rd

 

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Respondent’s Email dated 14.6.2011). The 3rd

 

Respondent’s Email dated 14.6.2011 had been copied to the 4th Respondent and stated –

 

“Dear [Petitioner],

 

Noted your comments. [4th Respondent] will be in KL office today at 11.30 am to see you to explain and or [sic] do the necessary amendment to the documents as highlighted by you.

 

I will also hand over my documents to her to do the necessary amendments.”

 

(emphasis added);

 

(b) the 4th Respondent went alone to the Petitioner’s office and signed the Blank Share Transfer Forms on 16.6.2011 in the presence of Mr. Jayanth. Such a conduct by the 4th Respondent and its timing, are consistent with the Petitioner’s Email dated 14.6.2011 and the 3rd Respondent’s Email dated 14.6.2011;

 

(c) the Petitioner did not go to the 4th Respondent and coerce the 4th Respondent to sign the Blank Share Transfer Forms. Nor did the Petitioner force the 4th Respondent to come to the Petitioner’s office to sign the Blank Share Transfer Forms. The 4th Respondent could have easily refused to go to the Petitioner’s office on 16.6.2011;

 

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(d) the 4th Respondent wrote a letter dated 30.6.2011 to the Company Secretary. If the Duress Allegation were true, the 4th Respondent could have easily complained to the Company Secretary in this letter;

 

(e) the 4th Respondent only lodged a police report on 26.8.2011 regarding the Duress Allegation (4th Respondent’s Police Report). There has been an unexplained delay of more than 70 days. The 4th Respondent’s Police Report, I find, is a reaction to the Petitioner’s 1st Attempt on 16.8.2011 to register the transfer of the 4th Respondent’s Shares. I will discuss the Petitioner’s 1st and 2nd Attempts later in this judgment;

 

(f) the 4th Respondent is not a gullible simpleton. The 4th Respondent is a director of the Companies and has relied on her fiduciary and statutory duties owed to the Companies to justify her action in this case. With the 4th Respondent’s knowledge, background and occupation, it is highly improbable that the 4th Respondent has been coerced by the Petitioner to go by herself to the Petitioner’s office on

 

16.6.2011 and is then forced by the Petitioner to sign the Blank Share Transfer Forms; and

 

(g) s 106 EA provides that when a fact is especially within the knowledge of a person, the person has the burden to prove that fact. Accordingly, the 4th Respondent has the particular burden of proof under s 106 EA to prove the Duress Allegation. Based on the above reasons, I find that the 4th Respondent has failed to prove the Duress Allegation as required by s 106 EA.

 

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122. The Respondents have relied on the “Gmail Chat’ conversation between the Petitioner and 4th Respondent on 17.6.2011 (Conversation on 17.6.2011) to support the Duress Allegation. I do not find the contents of the Conversation on 17.6.2011 to substantiate the Duress Allegation. Furthermore, the Conversation on 17.6.2011 concerned the Companies’ resolutions and not the Blank Share Transfer Forms. In any event, the 4th Respondent had already signed the Blank Share Transfer Forms a day earlier (16.6.2011), before the Conversation on 17.6.2011.

 

T4C. Petitioner’s 1st and 2nd Attempts

 

123. It must be noted that the Petitioner’s 1st and 2nd Attempts (on 16.8.2011 and 20.9.2011) [to register the transfer of the 4th Respondent’s Shares, appoint new directors of the Companies and effect the resignation of the 4th Respondent as a director of the Companies], took place after the 2nd Respondent’s BOD Meeting dated 15.8.2011 wherein –

 

(a) the 3rd Respondent was elected the 2nd Respondent’s executive chairman –

 

(i) contrary to the Mutual Agreement; and

 

(ii) on a dubious ground that the Petitioner had mismanaged the 2nd Respondent;

 

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(b) the 3rd Respondent had breached his fiduciary duties towards the Petitioner as an equal “quasi-partner’; and

 

(c) the 4th Respondent had breached her fiduciary duties owed to the Petitioner as a trustee of the 2nd Trust Deed (2nd Respondent) and

 

124. After what had happened to the Petitioner at the 2nd Respondent’s BOD Meeting dated 15.8.2011, the Petitioner would naturally take all steps to safeguard his legitimate interest in the Companies (Petitioner’s Defensive Measures). I do not find the Petitioner’s 1st and 2nd Attempts to be lawful grounds for the Petitioner’s Removal because the Petitioner’s 1 st and 2nd Attempts had been successfully thwarted by police reports and objections lodged with SSM and the Company Secretary by, among others, the 3rd and 4th Respondents. In other words, as the Petitioner’s 1 st and 2nd Attempts had failed due to the efforts of the 3rd and 4th Respondents, the Respondents could not rely on the Petitioner’s 1 st and 2nd Attempts to remove the Petitioner as alleged in the 5th Grievance. I will discuss later in this judgment on whether the Petitioner’s Defensive Measures would disentitle the Petitioner from seeking relief under s 181 CA.

 

T4D. Conspiracy Allegations

 

125. I will refer to the following 2 Court of Appeal cases on the tort of conspiracy:

 

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(a) in Renault SA v Inokom Corp Sdn Bhd & Anor and other appeals

 

[2010] 5 MLJ 394, at 406, KN Segara JCA decided as follows –

 

“In regard to the tort of conspiracy, the following need to be satisfied at this interlocutory stage:

 

(a) an agreement between two or more persons (that is an agreement between Tan Chong and others);

 

(b) an agreement for the purpose of injuring Inokom and Quasar;

 

(c) that acts done in execution of that agreement resulted in damage to Inokom and Quasar;

 

(d) damage is an essential element and where damage is not pleaded the statement of claim may be struck out.

 

(see Yap JH v Tan Sri Loh Boon Siew & Ors [1991] 4 CLJ (Rep) 243).’’

 

(emphasis added); and

 

(b) Low Hop Bing JCA held as follows in SCK Group Bhd & Anor v Sunny Liew Siew Pang & Anor [2011] 4 MLJ 393, at 399 –

 

212

 

“The tort of conspiracy is not constituted by the conspiratorial agreement alone. For conspiracy to take place, there must also be an unlawful object, or, if not in itself unlawful, it must be brought about by unlawful means: see Davies v Thomas [1920] 2 Ch 189 per Warrington LJ, and Seah Siang Mong v Ong Ban Chai & Another Case [1998] 1 CLJ Supp 295 (HC) per Ghazali J (now FCJ). There must be a co-existence of an agreement with an overt act causing damage to the plaintiffs. Hence, this tort is complete only if the agreement is carried into effect, thereby causing damage to the plaintiffs. In order to succeed in a claim based on the tort of conspiracy, the plaintiffs must establish:

 

(a) an agreement between two or more persons;

 

(b) for the purpose of injuring the plaintiff; and

 

(c) acts done in the execution of that agreement resulted in damage to the plaintiff: Marrinan v Vibart [1962] 1 All ER 869 at p 871 per Salmon J; and Halsbury’s Laws of England (4th Ed) Vol 45 at p 271, as applied by Ghazali J (now FCJ) in Seah Siang Mong .”

 

(emphasis added).

 

126. I find that there is no credible evidence to prove any of the following 3 elements of the tort of conspiracy (3 Elements of Tort of Conspiracy) in respect of all the Conspiracy Allegations:

 

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(a) the Respondents have failed to adduce any evidence regarding any agreement or understanding, formal or informal, written, verbal or implied, between the Petitioner and Alleged Conspirators to injure and/or defraud the Companies;

 

(b) no acts have been proven by the Respondents to be done by the Petitioner and Alleged Conspirators in execution of the agreement or understanding to injure and/or defraud the Companies; and

 

(c) no loss or damage has been suffered by the Companies due to the acts carried out by the Petitioner and Alleged Conspirators in execution of the agreement or understanding to injure and/or defraud the Companies.

 

127. In addition to the above reasons, the Conspiracy Allegations have no basis because –

 

(a) concerning the averment that the Petitioner is involved in a conspiracy to divert the 2nd Respondent’s business, it is not in the financial interest of the Petitioner to cause any loss or damage to the Companies as the Petitioner is an equal “partner’ in the Companies. Hence, it is inconceivable for the Petitioner to be involved in any conspiracy to divert the 2nd Respondent’s business which will reduce the value of the Companies wherein the Petitioner has a direct stake;

 

(b) in respect of the allegation that the Petitioner conspired with Mr. Muralee to derail the 2009 Suit, I cannot accept such an allegation because –

 

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(i) the Petitioner is a co-plaintiff in the 2009 Suit. A party in a legal action has the right to continue, compromise or discontinue the action; and

 

(ii) any agreement to maintain a suit in court amounts to champerty which is contrary to public policy and is unenforceable. This is clear from the following cases –

 

(1) in the Federal Court case of Theresa Chong v Kin Khoon & Co [1976] 2 MLJ 253, at 256, Gill CJ (Malaya) decided as follows –

 

“It is to be observed that section 24 [CA 1950] deals with such consideration and objects of a contract as are unlawful and therefore illegal. This section is in pari materia with section 23 of the Indian Contract Act. Pollock and Mulla on the Indian Contract Act (8th Edition) in its commentary on section 23 under the heading “Opposed to Public Policy” says this:

 

“The general head of public policy covers, in English law, a wide range of topics. Agreements may offend against public policy by tending to the prejudice of the State in time of war (trading with enemies, etc.), by tending to the perversion or abuse of municipal justice (stifling prosecutions, champerty and maintenance) or, in private life, by attempting to impose inconvenient and unreasonable restrictions on the free choice of individuals in marriage, or their liberty to

 

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exercise any lawful trade or calling…. It is now understood that the doctrine of public policy will not be extended beyond the classes of cases already covered by it. No court can invent a new head of public policy.””

 

(emphasis added); and

 

(2) in Otech Pakistan Pvt Ltd v Clough Engineering Ltd & Anor [2007] 1 SLR 989, at paragraph 32, Judith Prakash J delivered the following judgment of the Singapore Court of Appeal –

 

“As Cheshire, Fifoot and Furmstoris Law of Contract (Butterworths Asia, Singapore and Malaysian [*1001] (2nd Ed, 1998)) put it at p 639, champerty exists where one party agrees to aid another to bring a claim on the basis that the person who gives the aid shall receive a share of what may be recovered in the action. Public policy is offended by such an agreement because of its tendency to pervert the due course of justice. In Re Trepca Mines Ltd (No 2) [1963] Ch 199 Lord Denning explained this public policy in the following oft cited passage at pp 219-220:

 

The reason why the common law condemns champerty is because of the abuses to which it may give rise. The common law fears that the champertous maintainer might be tempted, for his own personal gain, to inflame the damages, to suppress evidence, or even to suborn witnesses. These fears may be exaggerated; but, be that so or not, the law for centuries has

 

declared champerty to be unlawful, and 216

 

we cannot do otherwise than enforce the law.”

 

(emphasis added).

 

I have not overlooked Dato’ Stanley’s Email dated 28.7.2011 which I have held to be admissible (please see the above Part Q4). In my view, there is nothing in Dato’ Stanley’s Email dated 28.7.2011 to prove that the Petitioner is involved in any conspiracy to sabotage the 2009 Suit.

 

Regarding the Respondents’ contention that Mr. Muralee cannot act for the Petitioner in the 2009 Suit because Mr. Muralee will be a witness in the 2009 Suit, I fail to see how Mr. Muralee’s choice to act for the Petitioner in the 2009 Suit can support the existence of a conspiracy between the Petitioner and Mr. Muralee to sabotage the 2009 Suit. As explained earlier, the Petitioner has the prerogative to continue, compromise or withdraw the 2009 Suit. Even if Mr. Muralee is barred by legal and ethical consideration from representing the Petitioner in the 2009 Suit, this matter does not amount to proof of the existence of a conspiracy between the Petitioner and Mr. Muralee to derail the 2009 Suit;

 

(c) in respect of the Respondents’ averment that the Petitioner has conspired with Alleged Conspirators to misappropriate the 2nd Respondent’s IP Rights, it is to be noted that the Copyright Suit, among others, has been withdrawn without any liberty to file afresh on 10.2.2015; and

 

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(d) regarding the conspiracy to misappropriate the 2nd Respondent’s funds amounting to RM50,000, a firm of solicitors need not be appointed in writing and may be retained orally or by the conduct of the client and solicitor. I refer to the Supreme Court case of Taman Zahari Zabidi Sdn Bhd v Adnan Sundra & Low & Anor [1990] 1 MLJ 424, at 425, wherein Abdul Hamid LP decided as follows –

 

“There was no written retainer of the respondent by the appellant but a retainer will be presumed if the conduct of the parties shows that the retainer of solicitors and client has in fact been established between them (Corderey on Solicitors (7th Ed) at p 578)”

 

(emphasis added).

 

Even if Messrs JM’s Letter Purportedly dated 18.8.2011 and 2nd Respondent’s Letter Purportedly dated 20.8.2011 were back-dated, there was affidavit evidence by the Petitioner that as the 2nd Respondent’s director and CEO, the Petitioner had retained Messrs JM to act for the 2nd Respondent. In any event, I do not see how an unauthorised payment of a law firm’s retainer fee by the 2nd Respondent, can prove a conspiracy between the Petitioner and Mr. Muralee to misappropriate the 2nd Respondent’s funds. Messrs CH’s Report provides a forensic accounting firm’s expert opinion. Such an expert opinion may assist the court under s 45(1) EA. I have perused Messrs CH’s Report and cannot find anything which can prove any of the 3 Elements of Tort of Conspiracy between the Petitioner and Mr. Muralee to misappropriate the 2nd Respondent’s funds.

 

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128. I have held Encik Shukri’s Report to be admissible subject to the exclusion of legally privileged communications between the Petitioner and Mr. Muralee (please see the above Parts Q3 and Q6). I will refer to the admissible part of Encik Shukri’s Report as “Encik Shukri’s Redacted Report”. I have perused Encik Shukri’s Redacted Report and do not find any credible support for any one or more of the Conspiracy Allegations. The reasons expressed in the above paragraphs 126 and 127 clearly negative any finding of conspiracy in this case.

 

T4E. Advance To 1st Respondent

 

129. Regarding the Advance To 1st Respondent, the Companies have entered into a consent order in NCC 4 Court on 9.2.2012 to pay RM593,700.70 to the Petitioner (Consent Order dated 9.2.2012). The Consent Order dated 9.2.2012 clearly evidenced the Advance To 1st Respondent for which the Petitioner was entitled to recover. Accordingly, the 1st and 2nd Section 218 Notices based on the Advance To 1st Respondent, could not be a justification for the Petitioner’s Removal.

 

T4F. Alleged breach of fiduciary duties by Petitioner

 

130. Based on the evidence adduced in this case, I am not satisfied that the Petitioner has breached any fiduciary and statutory duty owed to the Companies. If the Petitioner had breached any fiduciary and statutory duty owed to the Companies (Petitioner’s Breach), the Companies or the Companies’ solicitors would have sent a letter to the Petitioner to

 

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inform the Petitioner of the Petitioner’s Breach and demanded compensation or any other appropriate relief.

 

T4G. Proof of 5th Grievance

 

131. I have decided above to reject all the allegations advanced by the Respondents to justify the Petitioner’s Removal. I further decide that the Petitioner has proven the 5th Grievance on a balance of probabilities for the following reasons:

 

(a) the Petitioner’s removal as the 2nd Respondent’s CEO has breached the Mutual Agreement for the Petitioner to run the 2nd Respondent;

 

(b) the Petitioner’s removal as a director of the Companies has breached the Petitioner’s Equal Partner’s Rights in the “quasipartnership companies”. When the Petitioner is removed as a director of the Companies, save for the limited rights of the Petitioner as a shareholder of the 1st Respondent –

 

(i) the Petitioner has no access to the records, decisions and direction of the 2nd Respondent (the Petitioner is not a member of the 2nd Respondent); and

 

(ii) the Petitioner has limited access to the records of the 1st Respondent as its shareholder;

 

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(c) the Petitioner’s Removal was carried out –

 

(i) in breach of the 3rd Respondent’s fiduciary duty as a “quasipartner’ to act in good faith towards the Petitioner; and

 

(ii) in breach of the 4th Respondent’s fiduciary duty as a trustee under the 2 Trust Deeds; and

 

(d) the Petitioner’s Removal is commercially unfair to the Petitioner by –

 

(i) oppressing the Petitioner as a member of the 1st Respondent;

 

(ii) disregarding the Petitioner’s interest as the 1st Respondent’s shareholder;

 

(iii) discriminating the Petitioner unfairly as a member of the 1st Respondent; and/or

 

(iv) prejudicing the Petitioner as a shareholder of the 1st Respondent.

 

T5. 6th Grievance

 

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132. After the Petitioner’s removal as the 2nd Respondent’s CEO on 14.10.2011, by way of the 2nd Respondent’s DCR dated 17.10.2011 (2nd Respondent’s DCR dated 17.10.2011), the Petitioner was removed as an authorized cheque signatory of the 2nd Respondent’s bank accounts in SCB, HLB and CIMB. This forms the 6th Grievance.

 

133. The Respondents alleged that since the Petitioner was no longer a director and employee of the Companies, the Petitioner could not remain as an authorized cheque signatory for the Companies. I reject this averment as there is clear evidence that there is a “quasi-partnership” wherein the Petitioner has Equal Partner’s Rights which entitled the Petitioner to remain as an authorized cheque signatory for the Companies. Furthermore, the Petitioner was removed as the 2nd Respondent’s authorized cheque signatory on 17.10.2011 when the Petitioner was still a director of the 2nd Respondent. The Petitioner was only removed as a director of the 2nd Respondent on 3.2.2012.

 

134. I am satisfied that the Petitioner has proven the 6th Grievance on a balance of probabilities. My reasons are as follows:

 

(a) the Petitioner had already been removed as the 2nd Respondent’s CEO on 14.10.2011. There was therefore no risk that the Petitioner would mismanage the 2nd Respondent. Furthermore, the 3rd Respondent was appointed as the 2nd Respondent’s executive chairman at the 2nd Respondent’s BOD Meeting dated 15.8.2011.

 

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There is therefore no necessity to remove the Petitioner as the 2nd Respondent’s authorized cheque signatory on 17.10.2011;

 

(b) the removal of the Petitioner as the 2nd Respondent’s authorized cheque signatory, has breached the Petitioner’s Equal Partner’s Rights in the “quasi-partnership”;

 

(c) the 2nd Respondent’s DCR dated 17.10.2011 –

 

(i) was signed by the 3rd Respondent in breach of his fiduciary duty as a “quasi-partner’ to act in good faith towards the Petitioner; and

 

(ii) was signed by the 4th Respondent in breach of her fiduciary duty as a trustee under the 2nd Trust Deed (2nd Respondent); and

 

(d) the removal of the Petitioner as the 2nd Respondent’s authorized cheque signatory is commercially unfair to the Petitioner by –

 

(i) oppressing the Petitioner as a member of the 1st Respondent;

 

(ii) disregarding the Petitioner’s interest as the 1st Respondent’s shareholder;

 

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(iii) discriminating the Petitioner unfairly as a member of the 1st Respondent; and/or

 

(iv) prejudicing the Petitioner as a shareholder of the 1st Respondent.

 

There is commercial unfairness to the Petitioner as a shareholder of the 1st Respondent due to the removal of the Petitioner as the 2nd Respondent’s authorized cheque signatory because –

 

(1) the 2nd Respondent is a wholly-owned subsidiary of the 1st Respondent;

 

(2) income is solely earned by the 2nd Respondent while the 1st Respondent is only a holding investment company; and

 

(3) when the Petitioner was removed as the 2nd Respondent’s authorized cheque signatory, the Petitioner would not know the outflow of funds from the 2nd Respondent. This in turn would adversely affect the 1st Respondent as the parent company of the 2nd Respondent. Consequently, the Petitioner’s interest as the 1st Respondent’s shareholder would also be adversely affected.

 

T6. 9th Grievance

 

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135. In the 1st Respondent’s EGM on 29.11.2011, the 3rd and 4th Respondents had caused an increase in the 1st Respondent’s paid-up share capital which had diluted the Petitioner’s shareholding in the 1st Respondent. This is the gravamen of the 9th Grievance.

 

136. The Respondents alleged that the increase in the 1st Respondent’s paid-up share capital was necessary so as to remove the Petitioner’s threat to wind up the 1st Respondent based on the Advance To 1st Respondent. The Respondents further claimed that the Petitioner had been offered his portion of the increase in the 1st Respondent’s paid-up share capital but the Petitioner refused to so. As such, according to the Respondents, the Petitioner is now estopped from alleging dilution of his shareholding in the 1st Respondent.

 

137. I am not able to accept the Respondents’ above contentions because –

 

(a) the Consent Order dated 9.2.2012 is clear evidence that the Petitioner is entitled to be repaid the Advance To 1st Respondent;

 

(b) the increase in the 1st Respondent’s paid-up share capital does not reflect the “quasi-partnership” nature of the 1st Respondent whereby the Petitioner and 3rd Respondent are equal “partners” and the 4th Respondent only holds the 4th Respondent’s Shares in trust equally for the Petitioner and 3rd Respondent. Accordingly, the Petitioner is not obliged to take up his “portion” of the increase in the 1st

 

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Respondent’s paid-up share capital (which is less than the Petitioner’s 50% equitable shareholding in the 1st Respondent);

 

(c) there can be no operation of the equitable estoppel principle in view of the existence of the “quasi-partnership” in this case; and

 

(d) the timing of the increase in the 1st Respondent’s paid-up share capital on 29.11.2011, the same day the Petitioner was removed as a director of the 1st Respondent, could not be co-incidental. The increase in the 1st Respondent’s paid-up share, in my view, is part of the concerted efforts by both the 3rd and 4th Respondents to mete out commercial unfairness to the Petitioner as a member of the 1st Respondent.

 

138. I find as a fact that the Petitioner has proven the 9th Grievance on a balance of probabilities. This decision is premised on the following reasons:

 

(a) the increase in the 1st Respondent’s paid-up share did not take into account the Petitioner’s Equal Partner’s Rights in the “quasipartnership”;

 

(b) when the 3rd Respondent voted for the increase in the 1st Respondent’s paid-up share in the EGM, the 3rd Respondent breached his fiduciary duty as a “quasi-partnef’ to act in good faith towards the Petitioner;

 

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(c) when the increase in the 1st Respondent’s paid-up share was supported by the 4th Respondent in the EGM, the 4th Respondent had breached her fiduciary duty as a trustee under the 1st Trust Deed (1st Respondent); and

 

(d) the increase in the 1st Respondent’s paid-up share had the effect of diluting the 50% beneficial shareholding of the Petitioner in the 1st Respondent and is commercially unfair to the Petitioner by –

 

(i) oppressing the Petitioner as a member of the 1st Respondent;

 

(ii) disregarding the Petitioner’s interest as the 1st Respondent’s shareholder;

 

(iii) discriminating the Petitioner unfairly as a member of the 1st Respondent; and/or

 

(iv) prejudicing the Petitioner as a shareholder of the 1st Respondent.

 

T7. Cumulative effect of commercial unfairness to Petitioner

 

139. Based on the factual matrix of this case and for the reasons given above, I make a further finding of fact that the cumulative effect of the 3rd to 6th and 9th Grievances, constitutes “commercial unfairness” under s

 

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181 CA which has adversely affected the Petitioner as a shareholder of the 1st Respondent within all the 4 Categories.

 

140. In arriving at the above findings of fact, I did not consider conflicting averments in the affidavit evidence. Nor did I consider conflicting oral evidence given by the Petitioner and 3rd Respondent during their crossexamination. I rely on the factors enumerated in Part O of this judgment in deciding that the Respondents have committed “commercial unfairness” against the Petitioner within the meaning of the 4 Categories.

 

141. With respect to the many cases cited by both the Petitioner and Respondents, whether there is proof of the 4 Categories to substantiate a Section 181 Action is ultimately a question of fact which does not constitute a binding legal precedent – Pan-Pacific Construction Holdings Sdn Bhd. All the cases relied on by the Respondents’ learned counsel can be distinguished from the distinctive facts of this case.

 

U. Is Petitioner barred from seeking relief under s 181 CA?

 

142. If a plaintiff in a Section 181 Action manages to prove any one or more of the 4 Categories of “commercial unfairness”, the court nevertheless has a discretion to refuse relief under s 181(2) CA. This is clear from the use of the permissive word “may’ in s 181(2) CA.

 

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143. Despite the Petitioner’s Defensive Measures, I am not inclined to exercise my discretion to refuse relief to the Petitioner. This is due to the following reasons:

 

(a) the Petitioner as an equal “partner’ in the Companies, has suffered loss as a shareholder in the 1st Respondent due to the “commercial unfairness” meted out to the Petitioner by the 3rd and 4th Respondents. To refuse relief in this case will cause an injustice to the Petitioner;

 

(b) there is a “quasi-partnership” in this case wherein the 3rd Respondent has blatantly breached his fiduciary duty to act in good faith towards the Petitioner;

 

(c) the 3rd Respondent has breached the Mutual Agreement to allow the Petitioner to run the 2nd Respondent;

 

(d) the 4th Respondent has flagrantly breached her duties owed to the Petitioner as a trustee under the 2 Trust Deeds;

 

(e) there were 2 concealments of the Companies’ DCR’s by the 3rd and 4th Respondents as regards the initial appointment and subsequent resignation of the Additional Directors;

 

(f) the Respondents have advanced many spurious excuses to justify the commercially unfair treatment of the Petitioner and all these excuses have been rejected by this court; and

 

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(g) the Respondents have improperly attempted to admit –

 

(i) legally privileged communications between the Petitioner and Mr. Muralee; and

 

(ii) “without prejudice” communications between Mr. Muralee and the 3rd Respondent.

 

V. What remedy would end “commercial unfairness” suffered by Petitioner?

 

144. In Koh Jui Hiong, at p. 409, 424-425, 431, 432-433 and 443-444, the Federal Court held as follows:

 

“[2] In the course of arguments, both parties agreed to proceed with only Appeal No: 02-84-12, the result of which, both parties further agreed, would bind Appeal No: 02-83-12. We need therefore only to relate that leave was granted to the appellant (first respondent) in Appeal No: 02-84-12 to appeal against the order of the Court of Appeal in respect of the matter decided by the trial court in the exercise of its original jurisdiction, on one question of law, namely:

 

Whether an award of damages can be made in a petition under section 181(1) of the Companies Act 1965.

 

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[26] Damages to members is not amongst the reliefs mentioned in s. 181(2) which provides that… That is not however to say that the court could not award any other relief. Section 181(2) is a non-exhaustive list that does not limit other types of relief that the court could fashion, with the view to bringing to an end or remedying the matters complained of (see Company Law in Context, Text and Materials, by David Kershaw at p. 635). As said by Lord Wilberforce in Re Kong Thai Sawmill, s. 181 “leaves to the court a wide discretion as to the relief which it may grant, including among the options that of winding the company up”. That discretion is evidently wide enough to order reliefs not mentioned in s. 182(2), as could be seen from the following cases, albeit based on s. 210 [UK CA (1948)]

 

[34] In Singapore, in Kumagai Gumi Co Ltd v. Zenecon Pte Ltd [1995] 2 SLR 297, the trial court ordered winding up, buyout, and reimbursement of the loss suffered by the company. On appeal, it was submitted that the jurisdiction of the court to grant relief under s. 216(2) was limited by its express terms, the limitation being that the relief granted must be ‘with a view to bringing to an end or remedying the matters complained of, and that the ‘matter complained of’ meant a matter within s. 216. On that basis, it was submitted that the learned judge had no power to make the following orders: that Low pay to KPM the sum of $2,982,517.17; that Low purchase or procure the purchase of KPM’s shares in KZ Investments, and that Zenecon pay to KZ the rental for the use of certain items of equipment.

 

[35] The Singapore Court of Appeal duly affirmed the trial judge’s order that the company be compensated for the use of equipment belonging to the company, and would have affirmed the order that the errant director reimbursed the loss sustained by the company but for

 

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the lack of evidence (see Walter Woon on Company Law Revised 3rd edn. at para. 5.83).

 

[36] In Yeo Hung Kiang v. Dickson Investment (Singapore) Pte Ltd & Ors and Another Appeal [1999] 2 SLR 129, it was held by the Singapore Court of Appeal per Karthigesu JA, delivering the judgment of the court, that s. 216(2) of the Singapore Act gave the court a very wide discretion not just to bring to an end the matters complained of but also to ‘remedy’ such matters, and that in an appropriate case the discretion was wide enough to include an element of compensation in the relief granted. And in Low Peng Boon v. Low Janie [1999] 1 SLR 761, the Singapore Court of Appeal per LP Thean JA, delivering the judgment of the court, ordered the oppressor, as a consequent order to winding up, to make restitution to the company.

 

[39] The authorities positively asserted that relief of a compensatory nature to an oppressed member is within the discretion of the court to award. In a suitable case, the court could even award corporate relief to the object company.

 

[54] Walter Woon on Company Law (supra) at para. 5.82) asked whether issue had been raised to the “extent to which s. 216 of the Singapore Companies Act may be used to outflank the rule in Foss v. Harbottle and its statutory analogue s. 216A”. In point of fact, that was answered by the Singapore Court of Appeal in Kumagai Gumi Co Ltd v. Zenecon Pte Ltd [1995] 2 SLR 297: In our opinion, there is a limitation on the order which the court can make under s. 216. The order to be made must be made ‘with a view to bringing an end or remedying the matters complained of’ and we agree that ‘the matters complained

 

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of’ mean matters rightly complained of. Nevertheless, subject to this limitation, the jurisdiction to make an order under that section is very wide. Much depends on the matters complained of and the circumstances prevailing at the time of hearing.

 

(emphasis added)

 

[55] There is a limit to the extent to which s. 181 could be used to outflank the rule in Foss v. Harbottle. The order to be made must be made with a view to bringing an end or remedying the matters complained of’ under s. 181. The derivative action elements should be an incident of the matters complained of under s. 181. It would be an abuse of s. 181 where the nature of the complaint was misconduct rather than mismanagement (see Re Chime Corporation (supra) per Lord Scott). “To allow corporate claims to be pursued via the oppression remedy would effectively denude the statutory derivative action of much of its intended effect” (A Reconsideration of the Shareholder’s Remedy for Oppression in Singapore by Pearlie M.C Koh, CLWR 42 1(61) 1 March 2013). But in the instant case, especially now with the setting aside, by consent, of the buyout order, what is left is the award of damages obtained in a defectively instituted derivative action brought under s. 181. Given further that the order of damages should not have been granted in the first place, we find ourselves, with respect, at a loss to defend the order of damages.

 

[56] For the aforesaid reasons, we answer the leave question in the affirmative and in the following terms. An order of a compensatory nature can be made in a petition under s. 181(1) of the Companies Act 1965, if the order is with the view to bring an end or to remedy the matters rightly complained of under s. 181(1)(a) or (b).’’

 

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(emphasis added).

 

145. Based on Koh Jui Hiong, this court should grant relief to the Petitioner which would bring to an end or to remedy the 3rd to 6th and 9th Grievances (Proven Grievances).

 

146. On 3.6.2015, I gave an oral judgment in respect of, among others, the commercial unfairness suffered by the Petitioner as elaborated above. I then invited learned counsel to submit on the appropriate relief which would bring an end or would remedy the Proven Grievances (Remedy Order).

 

147. In the Petitioner’s submission on the Remedy Order, the Petitioner has firstly applied for an order to direct the 3rd and 4th Respondents to buy the Petitioner’s shares based on the “Net Tangible Assets” of the Companies as at 30.6.2011 (Petitioner’s 1st Prayer). The date of 30.6.2011 is proposed by the Petitioner because the 3rd Respondent has sent a proposal dated 29.6.2011 to value the shares of the Companies as at 30.6.2011. The Petitioner has abandoned his prayer to wind up the Companies. As an alternative to the Petitioner’s 1st Prayer, the Petitioner prayed for compensatory and exemplary damages.

 

148. In the Respondents’ submission on the Remedy Order, the Respondents prayed for the Companies to be wound up on the ground

 

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that, among others, the Petitioner’s Defensive Measures had contributed to the decline in the business of the 2nd Respondent. Furthermore, compensatory damages should not be awarded to the Petitioner who had already been awarded damages in respect of the Petitioner’s Counterclaim in the Conspiracy Suit and compensation in the Industrial Court for the Petitioner’s wrongful dismissal as the 2nd Respondent’s CEO.

 

V1. “Buy-out” order is not appropriate

 

149. After considering the Parties’ Submission On Remedy, I am unable to accede to the Petitioner’s 1st Prayer under s 181(2)(c) CA for the following reasons:

 

(a) the Companies are dormant with no source of income. Any “buy-out of the shares in the Companies will not be meaningful;

 

(b) the Companies are not listed on Bursa Malaysia whereby it will be easy to ascertain the price of the Companies’ shares at any point in time. Accordingly, there are serious problems in ascertaining the value of the Companies’ shares for the purpose of the proposed “buy-out order as follows –

 

(i) which date should be used to value the shares of the Companies? I cannot accept 30.6.2011 as the date to value the Companies’ shares because the first commercial unfairness (3rd

 

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Grievance) occurred at the 2nd Respondent’s BOD Meeting dated 15.8.2011; and

 

(ii) which valuation method should be adopted?; and

 

(c) which competent and independent valuer should be appointed for the purpose of the proposed “buy-out order? The parties in this case cannot agree on the appointment of the valuer.

 

V2. Companies should be wound up with an order for inquiry of compensatory damages

 

150. I am of the view that the first appropriate remedy is to wind up the Companies. I decide as such due to the following reasons:

 

(a) as decided above, the Companies are “quasi-partnership companies”. As there has been a breach of the fiduciary duties by the 3rd Respondent owed to the Petitioner, the first appropriate remedy to bring to an end or to remedy the Proven Grievances is to wind up the Companies under s 181(2)(e) CA; and

 

(b) a winding up of the Companies is appropriate because the Companies are now “shell” companies with no business and with no source of income. This is the best solution for the Companies.

 

The winding up of the Companies is supported by the following 2 cases –

 

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(i) in Looh Siong Chee [2015] MLJU 252, at paragraphs 16 and 17, Anantham Kasinather J (as he then was) decided in the High Court that there was sufficient evidence of oppression and the “best solution” was to wind up the company in question because the company was devoid of funds and required substantial funds to continue as a going concern. This High Court’s decision was affirmed on appeal to the Court of Appeal. The Federal Court granted leave to appeal against the Court of Appeal’s decision and subsequently dismissed the appeal to the Federal Court. In other words, the High Court’s decision to wind up the company in Looh Siong Chee has been affirmed by both the Court of Appeal and Federal Court; and

 

(ii) the Singapore Court of Appeal held as follows in Lim Swee Khiang, at paragraphs 91 and 92 –

 

“91 We note that the appellants have clearly stated their desire that Borden be wound up. Their main reason for this is that the familial and close-knit management that was originally conceived is no longer possible and Borden’s business would only continue to be exploited by the respondents for their own advantage. We are not minded to accept this submission. As I stated in Tang Choon Keng Realty (Pte) Ltd v Tang Wee Cheng [1992] 2 SLR 1114 at 1142, [58], the court’s discretion under s 216 of the CA should be exercised with a view to bringing to an end or remedying the matters complained of. If the state of affairs in a particular case can be remedied by

 

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an order other than winding up, there is no reason for a court to wind up the company. Further, we are of the view that winding up should only be ordered if, having taken into account all the circumstances of the case, it is the best solution for all the parties involved. In general, the courts are not minded to wind up operational and successful companies unless no other remedy is available.’’

 

(emphasis added).

 

151. On 26.6.2015, after considering the Parties’ Submission On Remedy, I intimated to learned counsel for all parties that the best solution in this case is to wind up the Companies. The Respondents’ learned counsel then, Dato’ David Morais, applied for the Official Receiver (OR) to be appointed as the liquidator for the Companies. On behalf of the Petitioner, Mr. Wong proposed Encik Baltasar bin Maskor (Encik Baltasar), a private liquidator, to be appointed as liquidator for the Companies. Parties then requested for time to submit on the choice of liquidator for the Companies (Further Submission).

 

152. Pending Further Submission, I appointed the OR as the Companies’ provisional liquidator pursuant to s 181(2)(e), (3) and 227(1) CA.

 

153. After considering Further Submission on 10.7.2015, I allowed the Petitioner’s application to appoint Encik Baltasar as the Companies’

 

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liquidator. This is because, as submitted by Mr. Wong, the Petitioner has obtained a monetary judgment of RM1,304,875 against the 2nd Respondent in the Petitioner’s Counterclaim in the Conspiracy Suit. As such, the Petitioner is an unsecured creditor of the 2nd Respondent. By virtue of my earlier winding up order of the Companies, this court has powers of a winding up court according to s 181(3) CA. The following High Court decisions have held that when a company is wound up, the winding up court should give priority to the views of the company’s unsecured creditors because these unsecured creditors have no means to obtain payment of their debts other than winding up –

 

(a) Mahadev Shankar J’s (as he then was) judgment in Cetico Sdn Bhd v The Tropical Veneer Co Bhd [1987] CLJ (Rep) 511, at 515; and

 

(b) the decision of Kang Hwee Ghee J (as he then was) in Arab-Malaysian Merchant Bank Bhd v Orient Apparel Bhd [1999] 2 CLJ 647, at 662-663.

 

154. Before proceeding to make the second appropriate order to bring to an end or to remedy the Proven Grievances, I need to address the Petitioner’s prayer for exemplary damages. I am not able to grant exemplary damages because this case does not fall within the ambit of the 2 categories of cases wherein exemplary damages have been awarded. I rely on the following cases:

 

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(a) in the High Court case of Abdul Rahim bin Sian v Mesdi bin

 

Warian [1985] 1 MLJ 442, at 443, Mahadev Shankar J (as he then was) held as follows –

 

“In the course of his submissions, Mr. Pritam Singh, Counsel for the Defendant, conceded the issue of liability and it was suggested that for general damages the Plaintiff should be awarded $25,000 and for special damages by way of loss of actual earnings, loss of future earnings, and for loss of earning capacity a sum of $10,000 would be fair. Mr. C.K.G. Pillay was in agreement with these figures. I therefore awarded the Plaintiff $25,000 by way of general damages and $10,000 by way of special damages for actual loss of earnings and also for damages for loss of earning capacity and loss of future earnings.

 

The severity of this unprovoked attack on the Plaintiff led me to the view that this was an appropriate case for exemplary damages. I referred Counsel to the case of Loudon v Ryder [1953] 2 QB 202; [1953] 1 All ER 74 as authority for the proposition that this was a proper case in which exemplary damages should be awarded. Both Counsel, out of deference to me, left the issue of exemplary damages to the Court. I then proceeded to award $15,000 as exemplary damages. I did so because I felt that this was a clear case where the Defendant should be punished for his conduct, and others who are minded to take the law into their hands should be deterred from inflicting this kind of violence. I also felt obliged to vindicate the strength of the law.

 

At the time this judgment was dictated the Order of the Court had not yet been extracted and I had an opportunity of reconsidering the matter. It come to my notice that the case of Loudon v. Ryder was overruled by Rookes v Barnard

 

[1964] AC 1129, 1229.

 

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It would appear that the categories in which exemplary damages may be awarded are very narrow. Reference may be made to paragraph 119 of the Halsbury’s Laws of England Vol. 12 at page 474 (4th Edition). The present case is not within the permitted categories and the award of $15,000 for exemplary damages was clearly per incuriam.

 

Accordingly I revise my order and hereby adjudge and order that the defendant in this case do only pay the Plaintiff the sum of $25,000 for general damages and $10,000 for special damages and for loss of future earnings and earning capacity.”

 

(emphasis added); and

 

(b) Lord Devlin explained in the House of Lords case of Rookes v Barnard [1964] AC 1129, at 1226 and 1227, that there are only 2 categories of cases for which courts may award exemplary damages –

 

“The first category is oppressive, arbitrary or unconstitutional action by the servants of the government. I should not extend this category -1 say this with particular reference to the facts of this case – to oppressive action by private corporations or individuals. Where one man is more powerful than another, it is inevitable that he will try to use his power to gain his ends; and if his power is much greater than the other’s, he might, perhaps, be said to be using it oppressively. If he uses his power illegally, he must of course pay for his illegality in the ordinary way; but he is not to be punished simply because he is the more powerful. In the case of the government it is different, for the servants of the government are also the servants of the people and the use of their power must always be subordinate to their duty of service. It is true that there is something repugnant about a big man bullying a small man and, very likely, the bullying will be a source of humiliation

 

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that makes the case one for aggravated damages, but it is not, in my opinion, punishable by damages.

 

Cases in the second category are those in which the defendant’s conduct has been calculated by him to make a profit for himself which may well exceed the compensation payable to the plaintiff. … It is a factor also that is taken into account in images for libel; one man should not be allowed to sell another man’s reputation for profit. Where a defendant with a cynical disregard for a plaintiff’s rights has calculated that the money to be made out of his wrongdoing will probably layered exceed the damages at risk, it is necessary for the law to show that it cannot be broken with impunity. This category is not confined to moneymaking in the strict sense. It extends to cases in which the defendant is seeking to gain at the expense of the plaintiff some object – perhaps some property which he covets – which either he could not obtain at all or not obtain except at a price greater than he wants to put down. Exemplary damages can properly be awarded whenever it is necessary to teach a wrongdoer that tort does not pay.

 

To these two categories which are established as part of the common law there must of course be added any category in which exemplary damages are expressly authorised by statute.”

 

(emphasis added).

 

It is clear that this case does not fall within the 2 categories explained in Rookes which justifies an award of exemplary damages.

 

155. Based on Koh Jui Hiong, I am of the opinion that the second appropriate order to bring to an end or to remedy the Proven Grievances is to order compensatory damages to be paid by the 3rd and 4th

 

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Respondents, jointly or severally, to the Petitioner in respect of all loss suffered by the Petitioner which flow from the Proven Grievances (Compensatory Damages Order). The Compensatory Damages Order is premised on the following reasons:

 

(a) as decided above, the Companies are “quasi-partnership companies” wherein the Petitioner has invested his expertise, time, money and efforts. In view of the Proven Grievances, this “quasipartnership” has been destroyed and consequently, the Petitioner has suffered loss. To put an effective end or to remedy the Proven Grievances, the Petitioner should be compensated by the 3rd and 4th Respondents for all loss suffered by the Petitioner which arise from the Proven Grievances; and

 

(b) as explained above, it is the best solution to wind up the Companies. However, since the Companies are “shelf companies, realistically, the Petitioner is not expected to be paid any dividend from the winding up of the Companies. Hence, the Compensatory Damages Order should be made in the interest of justice. If not, the Petitioner will only have the satisfaction of a paper judgment which has wound up the Companies.

 

156. The cause papers filed in this case, do not take into account any subsequent loss which the Petitioner may incur as a result of the Proven Grievance. As such, an inquiry of compensatory damages to be paid by the 3rd and 4th Respondents to the Petitioner, should be ordered (Inquiry).

 

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157. I do not accept the Respondents’ contention that since the Petitioner has been awarded damages in the Conspiracy Suit and compensation in the Industrial Court (2 Earlier Compensatory Orders), the Petitioner will be unjustly enriched by another sum of compensatory damages (assessed in the Inquiry). This is because the 2 Earlier Compensatory Orders are payable by the 2nd Respondent and not by the 3rd and 4th Respondents personally. As admitted by the Respondents’ learned counsel, the Companies are merely “shell’ companies and most likely, 2 Earlier Compensatory Orders may just constitute paper judgments. Accordingly, I do not foresee the Petitioner being unjustly enriched by compensatory damages assessed in the Inquiry.

 

W. Court order

 

158. In summary, this court makes the following orders:

 

(a) on 26.6.2015 –

 

(i) the 1st and 2nd Respondents are ordered to be wound up pursuant to s 181(3) CA;

 

(ii) the OR is appointed as a Provisional Liquidator over the 1st and 2nd Respondents;

 

(iii) the 3rd and 4th Respondents are ordered, jointly and severally, to pay costs of RM100,000 to the Petitioner (Costs Amount);

 

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(iv) interest at the rate of 5% per annum on the Costs Amount from 26.6.2015 until full settlement of the Costs Amount;

 

(v) the 3rd and 4th Respondents are ordered to pay compensatory damages, jointly and severally, to the Petitioner, in respect of the commercial unfairness committed against the Petitioner, as assessed by the court Registrar (Assessed Compensatory Damages);

 

(vi) interest at the rate of 5% per annum on the Assessed Compensatory Damages from the date of assessment until full settlement of the Assessed Compensatory Damages; and

 

(vii) parties are given liberty to apply; and (b) on 10.7.2015 –

 

(i) Encik Baltasar is appointed to be the liquidator of the Companies (Private Liquidator); and

 

(ii) the remuneration of the Private Liquidator shall be paid out from the Companies’ assets.

 

159. In closing, I must thank learned counsel from all parties for their clear and detailed submission, without which this judgment is not possible.

 

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WONG KIAN KHEONG

 

Judicial Commissioner High Court (Commercial Division) Kuala Lumpur

 

DATE: 17 SEPTEMBER 2015

 

Counsel for Petitioner : Mr. Wong Rhen Yen, Mr. Goik KenWayne and Encik Ahmad Ezmeel bin Ahmad Tarmizi (Messrs Dennis Nik & Wong)

 

Counsel for Respondents : Ms. Fiona Bodipalar, Dato’ David Morais and Ms. Thivina Kumaran (Messrs Bodipalar Ponnudurai De Silva)

 

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