Auspicious Journey Sdn Bhd v Ebony Ritz Sdn Bhd (W-02(NCC)(A)-1614-08/2016 Didengar Bersama A-02(NCC)(A)-1614-08/2016)

(a) whilst profitability of the said oil tanker chartering business of Semua International was guaranteed by Sumatec to Ebony Ritz, the latter was committed to see through payment of certain historical dividend from the said oil tanker chartering business to Sumatec;

(b) express obligations between the parties required Sumatec to make proportionate shareholders advances for the said oil tanker chartering business; and

(c) Sumatec was to spearhead the intended listing of Semua International’s shares on Bursa Malaysia to increase its market capitalisation with further contractual terms governing an intended disposal by Sumatec to the said co-investors of the 11 remaining 51% shareholding investment in the said oil tanker chartering business of Semua International. [10] In the period thereafter, there were subsequent supervening events that affected those original contractual expectations and these were –

(a) in October 2010, the said oil tanker chartering business was requiring cash advances from the RM10 million Facility to be made to it but there was no proportionate contribution from Sumatec or for that matter, Auspicious Journey. However in January 2011, these cash advances as envisaged by the RM10 million Facility were made to the oil tanker chartering business;

(b) the said oil tanker chartering business showed that it was under severe financial distress with Hoe Leong as the majority shareholder having advanced in excess of RM38 million directly to the said oil tanker chartering business; and

(c) Sumatec facing financial difficulty and obtaining court protection orders pursuant to section 176 of Act 125 against creditors whilst Sumatec’s bondholders asserting security rights over the 51% shareholding in Semua International held by Sumatec and calling on Sumatec to put forward a proposal to remedy the default failing which they would exercise rights had consequent to default. [11] What has emerged from the scrutiny of the records of appeal is that there was a profit shortfall for the financial year of 2012 and Sumatec was obliged to make good the profit shortfall pursuant to the OFRA. Thus, by a letter dated 4.9.2012, Ebony Ritz gave notice to Sumatec as to the profit shortfall and required Sumatec to make good the Profit Shortfall 12 Guarantee in the sum of approximately RM27,000,000.00 in accordance with the provision of the OFRA. However, Sumatec had failed, refused and neglected to comply with its obligations in relation to the Profit Shortfall Guarantee. [12] In the events that happened, Auspicious Journey subsequently discovered that Hoe Leong had, on 21.12.2012 entered into a conditional sale and purchase agreement with Setinggi Holdings, Ebony Ritz and Sumatec (the 51% SPA) for the disposal of the entire retained 51% equity interest of Sumatec in Semua International. This salvage act is to allow a structure in the form of a warehousing arrangement with a view for Hoe Leong to taking control of the oil tanker chartering business. In fact, Auspicious Journey’s case revolves around the 51% SPA. Broadly stated, pursuant to the 51% SPA, the 2% of the issued and paid up capital of Semua International was sold by Sumatec to Hoe Leong for a cash consideration of RM1,800,000.00 payable by Hoe Leong upon signing of the said agreement into an escrow account. The remaining 49% of the issued and paid up capital of Semua International was sold by Sumatec to Setinggi Holdings for a cash consideration of RM17,000.000.00 payable by Setinggi Holdings within 24 months after the date of consent from the bondholders. Further, the 51% SPA also provided that the rights and entitlements under the Profit Shortfall Guarantee and Ebony Ritz 2% Call Option which had accrued to Ebony Ritz were waived or relinquished by Ebony Ritz. It further provided for the provision of an indemnity by Ebony Ritz for the due performance of an obligation to be undertaken by Hoe Leong and the reassignment of dividends payable to Sumatec by Semua International. 13 [13] In March 2013, Auspicious Journey was made aware of that salvage and warehousing arrangement. In April 2013, Auspicious Journey was also aware –

(i) of the use of nominees for the 49% shareholding investment in Semua International under the salvage and warehousing arrangement; and

(a) the Ebony Ritz 2% Call Option was expropriated by Hoe Leong. Hoe Leong bought the 2% shares in Semua International in Hoe Leong’s name at the expense of Ebony Ritz;

(b) the Auspicious Journey’s 49% Call Option was expropriated by Hoe Leong and its representatives. A nominee of Hoe Leong, Setinggi Holdings, bought the 49% shares in Semua International in Setinggi Holdings’s name at the expense of Auspicious Journey;

(c) to facilitate the above, Hoe Leong, Geok Khim and Geok Lin caused Ebony Ritz to waive and/or relinquish Ebony Ritz’s rights and entitlements under the Profit Shortfall Guarantee and Ebony Ritz’s 2% Call Option;

(d) to further facilitate the above, Hoe Leong, Geok Khim and Geok Lin had caused Ebony Ritz to excute an indemnity to keep 14 Sumatec indemnified and harmless against any claims and demands made or suit commenced against Sumatec; and

(e) there was assignment of dividends to the effect that dividends which were previously payable premised upon conditions were reformulated to be payable upon stipulated timeframes. The previous conditions imposed were waived. [15] By reasons of the aforesaid, Auspicious Journey in its Originating Summons dated 6.6.2013 seeks to be granted a declaration that Hoe Leong –

(i) are conducting the affairs of Ebony Ritz in a manner that is oppressive to Auspicious Journey and/or in disregard of its interest as a member of Ebony Ritz; and

(a) an inquiry as to the damages suffered by Ebony Ritz, to be assessed and to be paid by the first to eleventh defendants in the court below to Ebony Ritz such damages as suffered and assessed, and with interest;

(b) in the alternative, an order that the second, third, fourth, tenth and eleventh defendants do render to Auspicious Journey’s 15 solicitors an account verified by affidavit within seven (7) days from the date of the order of all gains, benefits, enrichment or otherwise having arisen, accrued or been derived either directly or indirectly, by reason of the 51% SPA and disgorge to Ebony Ritz and/or Auspicious Journey within seven (7) days from the date of the order herein of all such gains, benefits, enrichment, and;

(c) that Hoe Leong do purchase Auspicious Journey’s shares in Ebony Ritz at a fair value to be determined by the court or an independent valuer with no discount for a minority shareholder, with a premium to reflect the loss suffered by Ebony Ritz as a result of the matters of unfair prejudice pleaded in the Originating Summons with interest. [17] During the proceedings in the High Court, affidavits were affirmed by the respective parties. Cross-examination of the deponents was ordered and conducted. In a nutshell, there was in fact a trial held over 17 non-consecutive days. Oral testimony was also taken from a third party witness, summoned by Auspicious Journey. THE HIGH COURT’S DECISION [18] At the conclusion of the trial, the learned judge, amongst others, decided as follows:

(a) Hoe Leong conducted the affairs of Ebony Ritz in a manner that was oppressive to and/or in total disregard of Auspicious Journey’s interest as a member of Ebony Ritz; 16

(b) Hoe Leong procured and/or caused to be done to Ebony Ritz which had and/or would unfairly discriminate against or which was or would be otherwise prejudicial to Auspicious Journey as a member of Ebony Ritz;

(c) Ebony Ritz be wound up under the provisions of Act 125 and Official Receiver be appointed as the liquidator for Ebony Ritz;

(d) general damages to be assessed by the Registrar, if any, that was suffered by Auspicious Journey by reason of the oppression;

(e) interest on the general damages to be paid by Hoe Leong; and

(f) Hoe Leong to pay cost of RM300,000.00 to Auspicious Journey. THE APPEAL [19] Arising from the aforesaid decision, 2 appeals were filed by Hoe Leong and Auspicious Journey to this Court. However, as we have indicated a little earlier, since only Auspicious Journey has filed for leave to appeal to the Federal Court against our dismissal of the appeal herein, our grounds of judgment consequently will only deal with the said appeal filed by it to this Court. [20] Before going more closely into the merits of the appeal, we think it is legitimate to begin by setting out in summary those parts of the High Court’s decision appealed against by Auspicious Journey. The appeal by Auspicious Journey before this Court is directed against the High Court’s order that – 17

(a) Ebony Ritz was wound up and Official Receiver be appointed as the liquidator for Ebony Ritz, as opposed to a buyout which was sought in the court below;

(b) damages be assessed by the Registrar and to be paid by Hoe Leong together with interest thereto; and

(c) the claims against the third to sixth respondents were dismissed. OUR DELIBERATIONS AND DECISION [21] As a convenient starting point, we reproduce below the relevant provisions of section 181 of Act 125 –

(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 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).

(e) provide that the company be wound up. [our emphasis] [22] It would suffice, for the purpose of expressing our understanding of the law, to refer to the case of Pan-Pacific Construction Holdings Sdn Bhd v Ngiu-Kee Corporation (M) Bhd & Anor [2010] 6 CLJ 721 wherein the Federal Court in the judgment of Richard Malanjum CJ (Sabah & Sarawak) (as His Lordship then was) authoritatively held that section 181 of Act 125 placed the burden upon a petitioner on the balance of probability to establish all the elements required to be proved thereunder. In order to succeed in its petition pursuant to section 181, the petitioner has to establish and must eminently prove according to the facts of the case that the affairs of the company are being conducted or the power of the directors are being exercised in a manner oppressive to the members of the company or in disregard of their interest or that some act of the company is unfairly discriminatory against or prejudicial to the members of the company. In essence section 181 permits judicial remedy on four categories of conduct or act and these are oppressive conduct, conduct in disregard of interest, act which is unfairly discriminatory or prejudicial conduct. [23] It is also clear in the authorities that where a case is established pursuant to section 181 of Act 125, the court has a wide discretion to grant relief thereunder as it thinks fit and in this regard such relief or order must be made with the view of bringing to an end or remedying the matters 19 rightly complained of. Subject to this limitation, the jurisdiction to grant an order is undoubtedly very wide (Kumagai Gumi Co. Ltd v Zenecon Pte. Ltd & Ors and other appeals [1995] 2 SLR 297 at page 315) and no limiting conditions are imposed, so that the granting of it is entirely in the discretion of the court (Re Kong Thai Sawmill (Miri) Sdn. Bhd. [1978] 2 MLJ 227). [24] Turning now to the appeal, it is not necessary for this Court to delve in great detail into the question whether Auspicious Journey had made out a case of oppression against Hoe Leong. Suffice it to say that in our view, the finding of oppression made by the learned judge was consistent with and amply supported by the evidence both oral and documentary, elicited during the trial. There was indeed sufficient and correct judicial appreciation as well as apprehension of the evidence undertaken by the learned judge. We do not find any misdirection in law as the legal principles relied upon by the learned judge are consistent with and in accord with established legal principles. In any event, Hoe Leong is not seeking leave to appeal to the Federal Court against the decision of this Court in the first appeal herein. [25] Before this Court, the resolution of the appeal will revolve around 2 points which clearly emerge as issues in this appeal, viz –

(a) whether individual and corporate wrongdoers, over and above the majority shareholder of Ebony Ritz, may be made liable in oppression proceedings, when oppression is found as against the said majority shareholder namely Hoe Leong. This, according to learned counsel, is primarily a question of law premised upon the underlying facts; and 20

(b) whether the remedy of winding-up and damages is the appropriate order given the underlying circumstances. This is a mixed question of law and fact. [26] On the first issue, it had been argued for Auspicious Journey that the third and fourth respondents namely Geok Khim and Geok Lin respectively as the majority directors of Ebony Ritz, ought to have been found liable without more, given that Hoe Leong was found liable as a wrongdoer. The acts undertaken at the Ebony Ritz level were undertaken by both of them as the directors of Ebony Ritz. Likewise, Setinggi Holdings and Teong Lay, ought to also have been found liable as they were privy to and participated in the wrongdoings, be it in relation to the 51% SPA or ortherwise. On the second issue, learned counsel for Auspicious Journey contended that there was an appealable error in that the winding-up and the assessment of damages were not the appropriate orders to be granted in terms of reliefs. The more appropriate order in terms of reliefs in the circumstances of the case would be an order to buyout Auspicious Journey’s shares in Ebony Ritz. [27] Having thus stated the issues upon which the appeal turns, the argument of Auspicious Journey which we may now consider concerns the first issue. The pertinent question that therefore immediately arises is what then is the basis in law and fact for Auspicious Journey to justify the inclusion in the section 181 proceedings of these nominated directors, Setinggi Holdings and Teong Lay to sustain a relief against them in their personal capacities. [28] It would be apposite for this Court to begin by considering the case against the nominated directors first namely Geok Khim and Geok Lin. 21 We shall thereafter turn to consider the case against Setinggi Holdings and Teong Lay, being the wider parties in relation to the corporate wrongdoer namely Hoe Leong. The position adopted by Auspicious Journey and strenuously argued by learned counsel in that behalf is that wrongdoers may be named and taken to its logical conclusion and wrongdoers who are named may be found liable. Further, directors of the subject company are also expressly recognised as potential wrongdoers in section 181(1) of Act 125. The language of section 181(1) plainly confers the widest jurisdiction on the court as regards parties, other than the company itself, against whom relief could be sought. A case much relied upon by learned counsel for Auspicious Journey to support this contention is Re Little Olympian Each-Ways Ltd [1994] 2 BCLC 420 in which whilst considering the English Companies Act 1985 which has sections equipollent to our section 181 of Act 125, it was held that the language of section 459 and 461 conferred the widest jurisdiction on the court as regards parties whom relief could be sought and that in appropriate case, relief could be sought against a non-member, or against a person not involved in the conduct complained of (at least if that person would be affected by the relief sought) and a person could be made a respondent even though no relief was sought against that person. [29] It was urged in the argument for Auspicious Journey that the learned judge fell into error when she held that in a minority oppression action, the issue to be determined was whether the minority shareholder had been oppressed by the majority shareholder, it did not concern the directors of the company in their personal capacities as directors. Geok Khim and Geok Lin were also wrongdoers, learned counsel submitted, for they undertook various acts found to be oppressive at the Ebony Ritz level. They also undertook various acts found to be oppressive as directors of 22 Ebony Ritz. Geok Khim and Geok Lin moreover, were the directors of Hoe Leong. They were nominated by Hoe Leong to be the directors of Ebony Ritz. Geok Khim and Geok Lin ought therefore to have been found liable, especially where the conduct of Hoe Leong and the 51% SPA itself had been impugned. [30] For Geok Khim and Geok Lin, learned counsel presented the contention that even though the High Court had made a finding of oppression against Hoe Leong, it ought not to find Geok Khim and Geok Lin personally liable, whether in their capacities as Hoe Leong’s nominated directors in Ebony Ritz, or as the directors for Hoe Leong, for the conduct of Hoe Leong. [31] Stating the matter very generally, in an action in which a complaint of acts of minority oppression such as in the present case is made, the pertinent issue to be determined is whether the minority shareholder has been oppressed by the majority shareholder. It certainly does not concern the directors of the company in their personal capacities as directors. Thus, when it has been urged upon us that Geok Khim and Geok Lin who are also directors of Hoe Leong are liable for the actions of Hoe Leong, we cannot accept this view as it is obvious and trite that a company director is nothing more than its agent. Such director therefore is not personally liable to a third party for the act of the company unless it can be shown that the act of such a director is of a personal character and that act is a personal wrongdoing on the part of that director to the third party outside of its obvious agency. 23 [32] A consideration of the authorities referred to us confirms the view of this Court which has been expressed above. Thus, Mc Cardie J in Said v Butt [1920] 3 KB 497 on this point said at page 505 – “But the servant who causes a breach of his master’s contract with a third person seems to stand in a wholly different position. He is not a stranger. He is the alter ego of his master. His acts are in law the acts of his employer. In such a case it is the master himself, by his agent, breaking the contract he has made, and in my view an action against the agent under the Lumley v. Gye (1) principle must therefore fail, just as it would fail if brought against the master himself for wrongfully procuring a breach of his own contract. This, I think, is the true answer to the ingenious arguments of Mr. Disturnal on behalf of the plaintiff upon this point. To hold otherwise might create at least three actions whenever a managing director or other authorized agent knowingly procured a breach of the employer’s contract. First, an action based on contract against the employer for the pecuniary loss caused by the breach of contract; secondly, an action for tort against the agent who had procured the breach of contract, wherein the damages would be at large and might include every element of annoyance, inconvenience, or indignity; and thirdly, an action against the employer himself for the tortious wrong committed by his authorized agent in procuring the employer to break his contract with the plaintiff. This extraordinary result shows, I think, that the contention of the plaintiff in this case cannot be sound. If the plaintiff here be right in his submission, then the flood-gates of litigation would indeed be widely opened.” [33] We would go further to state that this principle is so well-established that the courts have even held in some cases that a director is entitled if not obligated to cause the company to breach its contracts where to do so would be in the best interest of the company. Indeed, it may well be undertaken in the exercise of the director’s duty. When this happens, the tortious act is not considered that of the individual director but that of the company and it is against the company that the aggrieved party must seek 24 redress. We have been referred to the case of Imperial Oil Ltd v C & G Holdings Ltd et al. (1990) 62 DLR (4th) 261 in support of this proposition. The Court of Appeal of the Supreme Court of Newfoundland there in the judgment of where Marshall JA held at page 264 – “Where, in the opinion of a director, the interests of the company would best be served by breaking its contractual commitments, he or she is entitled, if not obligated, to cause the company to do so. The tortious act is not considered that of the individual director but of the company against whom the aggrieved party may seek remedy for breach. Therefore, the self-same act knowingly and intentionally committed, which will expose a third party who was otherwise a stranger to the contract to liability for wrongful contractual interference, may not incur liability for a director of a company. Indeed, it may well be undertaken in the exercise of the director’s duty.” [34] Further mention must now be made that the above principle found approval with this Court in Abdul Manaf Mohd bin Ghows & Ors v Nusantara Timur Sdn Bhd & Ors [1997] 3 MLJ 661 where Siti Norma Yaakob JCA held that “a director or an authorized officer of a company who executes an agreement on its behalf is merely acting as an agent of the company and is thereby not personally liable for the breaches or acts of the company, unless there are express provisions in the agreement or other document to the contrary making the director or officer personally liable for the breaches or acts of the company”. [35] The most recent decision in this vein is that of Lee Swee Seng JC in Q2 Engineering Sdn Bhd v PJI-LFGC (Vietnam) Ltd & Ors [2013] 8 MLJ 157. His Lordship at paragraphs [94] to [96] of the decision agreed with and accepted the legal position stated in Said v Butt and Imperial Oil Ltd, supra. The learned judge said – 25 “[94] I agree with Mr Conrad Young that the cases of Said and Imperial Oil clearly put paid to the plaintiff’s case against the third defendant. As is clear from those cases, for the tort of inducing a breach of contract to bite, the alleged inducer must necessarily be a ‘stranger’ to the contract alleged to have been broken as such. [95] As rightly pointed out by Mr Conrad, in Said’s case the alleged inducer was the managing director of the contracting party alleged to be in breach (the theatre), and in Imperial Oil’s case the alleged inducers were the directors and shareholders of the contracting party in breach. In both cases the pleas were rejected, as the parties charged to be inducers were not ‘strangers’, both being the decision-makers, or in other words the controlling minds or alter egos, of the contracting parties alleged to have been in breach. [96] So too here, where the plaintiff’s case is that the third defendant is the controlling mind of the first defendant. I cannot agree more with Mr Conrad that this plea is simply unsustainable in law, for like was said in Said’s case if one were to accept the plaintiff’s case in this regard, then in every case of breach of contract by a company the alleged defaulting company’s directors, shareholders, parent/holding company and subsidiaries will all automatically be liable and be enjoined as parties, and that simply cannot be, and is not the law!” [36] The decision of the Court of Appeal for Ontario in the case of ScotiaMcleod Inc et al. v Peoples Jewellers Ltd. et al. 129 DLR (4th) 711 provides a situation where a director can be made personally liable if he is directly and personally involved in the wrongful act. In that case the two plaintiff companies purchased unsecured debentures in the first defendant, Peoples Jewellers. As an inducement to do so, the plaintiffs were provided an information package which did not disclose a number of liabilities of Peoples Jewellers. This, the plaintiffs alleged, amounted to 26 intentional or negligent misrepresentations on the Part of People Jewellers’ directors. The plaintiffs’ claim was dismissed at first instance. On appeal, the Court of Appeal for Ontario allowed the plaintiffs’ appeal in respect of the 2 directors who were directly and physically involved in the misrepresentations but dismissed the appeal in respect of the rest of the directors who were not so directly involved. [37] The above case shows that it is not enough to prove that the directors caused the company to enter into a conduct or a course of conduct that the court considers unlawful in order to attach personal liability to them. There must be something tortious about the acts of the directors themselves, or wrongful acts that take them out of the role of the directing mind and will of the company and into the realm of personal wrongdoing. We would say however that this is not the case in the appeal before us neither is it the position taken by Auspicious Journey that the acts of Geok Khim and Geok Lin had entered the realm of personal wrongdoing or that they had gone on a personal frolic of their own without Hoe Leong’s sanction particularly in salvaging the investment through the subsequent conditional warehousing arrangement. On the contrary, Auspicious Journey alleges that the conduct of Geok Khim and Geok Lin in causing Hoe Leong to breach its joint-venture agreement and various other agreements with them amounted to oppressive conduct. The result is therefore that the above authorities make it clear that both Geok Khim and Geok Lin were acting as agents of Hoe Leong and cannot thus be personally liable for acts performed on behalf of Hoe Leong. [38] In paragraph 63 of the grounds of decision after full trial, the learned judge in dealing with this issue recognised what was manifestly in play 27 that is a salvage and warehousing arrangement triggered by subsequent events. This is what the learned judge said – “63. It must be emphasized that based on the evidenced adduced by the parties, it was clear that based on the evidence adduced by the parties, it was clear that the Directors breached the respective contracts in the best interest of the company in its investment in Semua International.” [39] What Geok Khim and Geok Lin did as found by the learned judge above was not in relation to Hoe Leong. Instead, the decision of Hoe Leong through these nominated directors was in the best interest of Ebony Ritz. The learned judge then recognised the above legal position of whether a case for extended liability and relief could be made out against Geok Khim and Geok Lin for their acts at Ebony Ritz. In our judgment, Geok Khim and Geok Lin made their decision for Hoe Leong and did not become personally liable simply because it made a decision for Hoe Leong in a setting where Hoe Leong had breached its contractual relationship with a third party namely Auspicious Journey. The learned judge ultimately concluded that the relationship between the principal parties namely Auspicious Journey and Hoe Leong in the joint venture could no longer exist, and the investment holding company of the parties namely Ebony Ritz was a patently failed joint venture and was in dire financial situation therefore winding up of Ebony Ritz was the most appropriate remedy to be granted. [40] On the fact pattern of the entire case, we think that there is no basis for Auspicious Journey to seek to impose an extended liability on these nominated directors who were no more than mere agents of Hoe Leong. The fact that these nominated directors made the decision for Hoe Leong 28 does not translate to the personal liability on the part of these directors. Under the circumstances, Auspicious Journey has not made out a case to justify the inclusion of these nominated directors for relief in these proceedings. [41] One remaining point on this subject that we want to raise as well concerns the issue of damages granted to Auspicious Journey occasioned by oppression attributed to Hoe Leong. By way of emphasis, we cannot overlook the fact that any finding of liability against the nominee directors would also consequently necessitate an order for damages against them to be made, hence, double recovery may seem inevitable. Auspicious Journey would in this situation thus be unjustly enriched if the court extends the liability of Hoe Leong to its nominee directors. Accordingly, we do not think that there is a basis for Auspicious Journey to seek the court to impose an extended liability or relief against Geok Khim and Geok Lin to the effect we have indicated earlier. [42] Auspicious Journey next strenuously pressed upon this Court with the necessity to also include Setinggi Holdings and Teong Lay for relief in these proceedings premised on the contention that they were privy and participated in the wrongdoings in relation to the 51% SPA. In short, they are also wrongdoers and ought to have been found liable, learned counsel submitted. It is perhaps important to remember that the subsequent undisputed events concerning Sumatec and its bondholders gave rise to the conditional warehousing arrangement of December 2012 where there were contractual rights to purchase a 2% interest by Hoe Leong and a 49% interest by Setinggi Holdings from Sumatec and its bondholders. It is worthy of note that there is no dispute to the affidavit evidence of Auspicious Journey deposed by Andy Kuek on 12.11.2013 that Teong Lay 29 was at all material times the chief financial controller of Hoe Leong and in control of Setinggi Holdings. We should in addition stress that there is no controversy of the fact that Teong Lay and Setinggi Holdings are neither a director nor shareholder of Ebony Ritz. [43] That said, we are mindful that the affidavit evidence of Auspicious Journey at the outset would show the contention that Setinggi Holdings and Teong Lay are acting or accustomed to acting under the directions of Hoe Leong or otherwise are nominees of Hoe Leong in the said warehousing arrangement. In addition, it also describes the contention adopted by Auspicious Journey which is laced with some form of conspiracy alleging that Geok Khim, Geok Lin, Hoe Leong, Teong Lay and Setinggi Holdings had acted in a concerted effort in their involvement in that warehousing arrangement which is adverse to the rights and interest of Ebony Ritz and Auspicious Journey. That being the case, both Teong Lay and Setinggi Holdings, ought to be personally answerable for the broad relief sought (see AR 2(13) pages 2568-2569). The question that has significantly emerged is what then is the basis in law and fact for Auspicious Journey to seek relief against Setinggi Holdings and Teong Lay in these section 181 proceedings. [44] We begin by stating our finding on this aspect that the principal director of Auspicious Journey namely Andy Kuek had admitted in cross examination (see AR 22(2) at page 327) that he was unable to say who were the parties to the agreement to the alleged conspiracy. There is the settled law on addition of wider parties in a minority oppression action. This settled law, we apprehend, can be simply stated as follows: 30

(a) an agent or nominee does not carry personal liability for acts undertaken on behalf of its principal; and

(b) the addition of a party who is neither a shareholder nor a director of the target company in an oppression proceeding will only be entertained in exceptional circumstances and that again only for the purpose of relief. [45] It is not in controversy that the underlying transaction in the warehousing arrangement envisaged the purchase of 49% of the issued and paid-up capital of Semua International by Setinggi Holdings from Sumatec. On the involvement of Setinggi Holdings and Teong Lay to the prospective purchase of that 49% interest, the relevant affidavit evidence of Teong Lay affirmed on behalf of himself and Setinggi Holdings (see AR 2(13) at pages 2615 to 2617) is broadly as follows:

(a) Setinggi Holdings was Malaysian nominee brought in because Auspicious Journey was not prepared to crystallise its purchase of that 49% interest;

(b) Setinggi Holdings was thereafter invited to warehouse the agreement to purchase that 49% interest in anticipation of a co-investor to assume the same; and

(c) Setinggi Holdings has no intention of asserting rights to that purchase of the 49% interest to the detriment of either Ebony Ritz or otherwise, instead they participated in that aspect of the warehousing arrangement with an overall intention of protecting the interest of all parties until such time that a co-investor was identified and brought in. 31 [46] We would necessarily emphasize that cross-examination of Teong Lay by learned counsel for Auspicious Journey significantly sought to establish that Setinggi Holdings was no more than a nominee in that warehousing arrangement. The objective facts bore this out and, in any event, this is consistent with Auspicious Journey’s own characterisation of Setinggi Holdings namely that it was no more than a nominee of Hoe Leong. [47] That then leaves us with the threshold core issue namely what is the factual basis for inviting the court to grant relief against Setinggi Holdings and Teong Lay more so when regard is had to the following:

(a) in the course of cross-examination of Teong Lay (see AR 2(11) at pages 2164-2168 and 2222), he maintained that Setinggi Holdings was not asserting a personal interest to acquire for itself that 49% interest other than to protect it under the warehousing arrangement towards a co-investor of financial means thereafter assuming the same. In this regard the co-investor should be a friendly Malaysian party which is required to take up the remaining 49% shares under a warehousing arrangement for purpose of statutory compliance with the Merchant Shipping Ordinance 1952. During cross-examination of Andy Kuek, he agreed that a Malaysian partner with Hoe Leong was a critical aspect to the relationship. As far as Teong Lay is concerned, he participated in that respect of warehousing arrangement in order to assist in protecting the interest of all parties until such time that co-investor was identified and brought in; 32

(b) in the course of cross-examination of Andy Kuek the principle director and deponent of Auspicious Journey (see AR 2(1) at page 145 and AR 2(2) at page 281), Auspicious Journey was invited to abate the complaint on the warehousing arrangement by taking up the purchase of the 49% interest (then still with Sumatec and its bondholders) from the purchase rights had by Setinggi Holdings but Auspicious Journey however took the position that it was not interested to acquire the 49% interest;

(c) the subsequent cross-examination of Teong Lay (see AR 2(11) at pages 2105 to 2107) and his re-examination (see AR 2(11) at page 2221) reveal that the warehousing arrangement on the prospective purchase of the 49% interest had since lapsed and Setinggi Holdings did not proceed with the purchase of the same with the position consequently reverting back to rights had from the outset by Sumatec and its bondholders. [48] Since Auspicious Journey is not interested in asserting its right to acquire the said 49% interest and given that Setinggi Holdings no longer has rights to acquire the 49% interest, there is, in our judgment, completely no basis to justify relief against Setinggi Holdings and Teong Lay. This is even more so when it is and has been Auspicious Journey’s case that Setinggi Holdings was no more than a nominee of Hoe Leong and any complaint on the warehousing arrangement had by Auspicious Journey should have been properly directed to Hoe Leong. We are satisfied that Auspicious Journey’s argument on this point is one which is imminently unpalatable and must consequently be rejected. [49] On that basis, there is certainly merit in the contention of learned counsel for the respondent that the learned judge clearly did not err when 33 Her Ladyship dismissed the claim for the court to impose an extended liability or relief against Geok Khim, Geok Lin, Setinggi Holdings and Teong Lay. [50] We now turn to the second and last remaining issue that has been pressed upon us in this appeal. It is, as it is clear to us, concerning the issue of reliefs. The High Court’s grounds of decision dealing with this issue are encapsulated in paragraphs 70 to 74. [51] The point of importance in the contention of learned counsel for Auspicious Journey focuses on the decision of the learned judge in granting the winding up of Ebony Ritz as the appropriate relief in the circumstances of this case. Learned counsel contended that the learned judge fell into error when she made the finding that buyout order would render Ebony Ritz to be unable to carry out its business given the provisions of the Merchant Shipping Ordinance 1952 which requires Semua International’s vessels to be a Malaysian ship by virtue of section 11(1) thereof. It ought to be mentioned once again that one of the reliefs sought by Auspicious Journey by way of further and alternative remedy is for Hoe Leong to purchase the shares of Auspicious Journey in Ebony Ritz at a fair value to be determined by the court or an independent valuer. [52] What has emerged from the scrutiny of the grounds of decision is that the learned judge was very clear in her mind that the appropriate relief to be granted in the circumstances of this case was the winding up of Ebony Ritz. We have stated earlier in our judgment that the court in this regard has wide power to grant remedies or orders in cases of oppression under section 181 of Act 125. The relevant statutory provision is found in subsection 181(2) which we have reproduced at paragraph 21 in our 34 judgment. Although the power given to the court to remedy oppression is very wide, the exercise of such power is subject to one limitation which is that the remedy or order granted must be made with a view to bringing to an end the matters complained of. This view was expressed by LP Thean JA in the Singapore Court of Appeal’s decision of Kumagai Gumi Co Ltd, supra, at page 304 as follows: “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 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.” [our emphasise] Kumagai Gumi Co Ltd was cited with approval by the Federal Court in Koh Jui Hiong @ Koa Jui Heong & Ors v Ki Tak Sang @ Kee Tak Sang & Anor Appeal [2014] 3 MLJ 10 at paragraph 35. [53] Accordingly, the relief granted in this case must bring an end or remedy the matters complained of that is, the oppression as has been found by the learned judge. Further point must also be made from a perusal of subsection 181(2) of Act 125 which is that all the remedies listed under this subsection plainly do not have priority over one another and is to be granted according to the particular circumstances of the particular case. Essentially, even if the practical solution for the corporate equivalent of a divorce in the form of a buyout order is the most common remedy given in oppression cases, it does not preclude the court from granting other remedies listed in the section including the order of winding up which learned counsel for Auspicious Journey submitted should only 35 be a remedy of last resort. But, there may well be cases where the most appropriate remedy in the circumstances is a winding up order even though a buyout would also bring an end or remedy the matters complained of. This view was clearly articulated by the Singapore Court of Appeal in Kuah Kok Kim v Chong Lee Leong Seng Co (Pte) Ltd [1991] 1 SLR 795 at paragraph [7] – In particular, no less than six reliefs are specified in s 216(2), which the court is empowered to grant, including an order to wind up the company; but, having regard to the wide powers expressly provided therein, these are by no means exhaustive. All these reliefs rank equally and it is not correct to say that the primary remedy under this section is winding up…Nor conversely is it correct to say that winding up is granted only if all the other reliefs specified in s 216(2) are found to be inadequate or ineffectual for the purpose of remedying the matters complained of. With respect we are unable to agree with the view expressed by Chan Sek Keong J that a court in Singapore will not wind up a company on the ground of oppressions where any of the other reliefs provided in s 216 is a sufficient remedy to bring to an end the matters complained of…There may be and could be circumstances in which relief other than winding up would put an end to the oppression but nonetheless the court considers that winding up is a more appropriate remedy. [54] The Singapore case of Low Peng Boon v Low Janie & Ors and other appeals [1999] 1 SLR (R) 337 is an example of a case where winding up was determined to be the most appropriate remedy, although it was not sought by the petitioner. In this case, the petitioner alleged that her father, half-brother and cousin had mismanaged a family company by using its funds for their personal expenses, sponsoring personal holiday trips abroad, refusing to declare dividends and refusing to answer her queries on the management of the company funds. The Singapore Court of Appeal took into account the fact that the company was a family 36 company which depended very much on the relationship between the family members to function. Since that relationship had broken down, the Singapore Court of Appeal found that the only appropriate remedy in the circumstances was to wind up the company. We quote below the relevant excepts of the Singapore Court of Appeal’s decision in the judgment of LP Thean JA – “[56] “ECPK and its operating subsidiaries are a prosperous group of companies, and in normal circumstances an order requiring the oppressive majority (in this case LPB and LKG) to buy the shares of the oppressed minority (in this case JL) is an appropriate order. But this is a very unusual case and there are other considerations which we should bear in mind in determining the appropriate remedy. This is a family company which has been operating for several decades. The strength of the company lies in the unity and commitment of each member of the family to advance the interests of the family business. Once, however, there is a rift in the family, it may or would no longer be feasible for the business to continue. The Group has been managed and run by LPB, LKG, LKS and JL. LPB is about 85 years old, half paralysed and wheelchair-bound, and is hardly in a position to manage and run ECPK and its subsidiaries. Notwithstanding that, he is not asking for a winding-up order. Subject to the determination of an appropriate price and presumably subject to the court granting him an order authorizing the necessary financial assistance to be provided by ECPK to enable him to buy the shares, he is in favour of buying the shares of JL. Be that as it may, we do not think that he could effectively run the Group without the assistance of LKG and probably LKS. Further, we do not expect that he would be able to change his management style and temperament; he would remain autocratic and domineering and a dominant figure at board and management levels and would continue to deal with the affairs of ECPK and its subsidiaries as though these companies were all under his sole proprietorship.” [our emphasis] 37 [55] In Low Peng Boon, the petitioner initially prayed for a buyout order to be made and, failing that, prayed that the company be wound up. She subsequently withdrew the prayer for winding up, but the court determined that winding up was the most appropriate remedy, and ordered it anyway. [56] The Civil Division of the English Court of Appeal in Antoniades v Wong & Ors [1997] 2 BCLC 419 upheld the trial judge’s decision refusing to grant a buyout order. The Court of Appeal considered that the trial judge had exercised his discretion correctly holding that the liquidator would be in a better position than the court to carry out investigation into the relevant facts and arrive at a proper return due to the petitioner. The court there said at page 427 a-d – “The judge gave these reasons for refusing to exercise his discretion. First, the formula for ascertaining the value of the shares proposed by the petitioner would not yield a fair price for the shares. Second, the order was simply not a practical proposition. It would require resolution of what the judge described as a ‘multitude of matters’ in relation to the affairs of the company where solvency was in doubt. It would involve the court embarking on an extremely laborious and expensive process, requiring a degree of co-operation between the parties to the litigation which had hitherto been lacking. Third, the judge placed importance on the fact that the company had been dormant since the middle of June 1993 and neither side had any use for it as a going concern. In those circumstances a liquidator would, in the judge’s view and in mine, be in a better position than the court to carry out investigation into the relevant facts and arrive at a proper return due to the petitioner.” [our emphasis] [57] Further, a consideration of the relevant authorities shows that it would not be appropriate for the court to make a buyout order when such an order would not be meaningful because the company is no longer a going concern. A useful review of the position was undertaken by Wong 38 Kian Kheong JC in Toralf Mueller v Alcim Holding Sdn Bhd [2015] MLJU 779 with which we are in full agreement – “[149] After considering the Parties’ Submission On Remedy, I am unable to accede to the Petitioner’s 1st Prayer under s 181(1)(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 Grievance) occurred at the 2nd Respondent’s BOD Meeting dated 15.8.2011; and

(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(1)(e) CA; and 39

(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 –

(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 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…” [our emphasis] (see also Looh Siong Chee v Numix Engineering Sdn Bhd & Ors and other appeals [2015] 4 MLJ 561, FC). [58] The totality of the case considered in its factual matrix would inevitably show that the buyout remedy would not be the most appropriate relief. We would, by way of emphasis, say on this aspect that any order of buyout made by the court would not yield a fair price as Ebony Ritz is a failed joint venture and is now in dire financial straits. Granting a buyout in these circumstances would only unjustly enrich Auspicious Journey and it should not be allowed to use these proceedings to unjustly enrich itself or to divest itself of a bad bargain. Moreover, in our view it is necessary to consider further the fact that much like the situation in Antoniades and Toralf Mueller, supra, the parties in the present suit are unable to agree on the basis of valuation, let alone an independent valuer to carry out the 40 valuation. May it be remembered that Auspicious Journey seeks the High Court’s order that Hoe Leong do purchase the Auspicious Journey’s shares in Ebony Ritz at a fair value to be determined either by itself or by an independent valuer. The learned trial judge however found that the parties were unable to agree on the basis of valuation let alone an independent valuer to carry out the valuation. In this regard, the learned judge had previously granted the parties time to see if they could come to some sort of agreement with regard to valuation of shares for the purposes of buyout, but no such agreement was reached. [59] Further, and more significantly, a buyout will put Ebony Ritz in a position where it would be unable to carry out its business for being in breach of statutory requirements. We would reiterate for clarity that Ebony Ritz is a joint venture company formed for the purpose of investing in Semua International, a company that runs an oil tanker chartering business. To carry out this business, Semua International is bound by the provisions of the Merchant Shipping Ordinance 1952 under which section 11 thereof manifests the requirement that the majority of the shareholding of the company involved in the oil tanker industry is held by Malaysian citizens. We reproduce from the Merchant Shipping Ordinance 1952 the relevant provisions of section 11 – “Section 11. Qualification of Malaysian Ship.

(a) Malaysian citizens; or

(b) corporations which satisfy the following requirements: 41

(i) the corporation is incorporated in Malaysia;

(v) the majority, or if the percentage is determined by the Minister under subsection (1A) then the percentage so determined, of the directors of the corporation are Malaysian citizens.” [60] Under section 65I of the Merchant Shipping Ordinance 1952, the Board may revoke any licence if it is satisfied that the license contravenes any of the provisions of Part IIA. It provides as follows – “Section 65I. Revocation of licence. The Board may revoke any licence if it is satisfied that the licensee, his servant or agent has –

(a) contravened any of the provisions of this Part or any regulations made thereunder; or

(b) committed a breach of any of the terms or conditions of the licence; Provided that no licence shall be revoked unless the licensee has been given a reasonable opportunity of making a representation against the intended revocation.” Section 65KA, in addition, prohibits any ship other than a Malaysian ship from engaging in domestic shipping. Failure to comply with section 65KA constitutes an offence. The section provides – 42 “Section 65KA. Prohibition of non-Malaysian ships to engage in domestic shipping.

(b) for the shipment of goods or the carriage of passengers –

(i) from any port of or place in Malaysia to another port or place in Malaysia; or