1. ) CHIN HUI MIN (Pemilik Tunggal berniaga atas nama dan gaya- GP BAR & BISTRO - No. Pendaftaran- 201903341997 (003055212-W)) v GENT PALACE BAR & BISTRO (WA-12ANCC-45-03/2022)

CHIN HUI MIN (Pemilik Tunggal berniaga atas nama dan gaya “GP Bar & Bistro) [Registration No.: 201903341997 (003055212-W)]

ANG BEE KIONG (NRIC No.: 650810-01-6069)

SHIM WAI KEAT (NRIC No.: 840810-08-7139) …. APPELLANTS AND GENT PALACE BAR & BISTRO [Registration No.: 201803110128 (002808237-W)] (Mendakwa sebagai firma) …. RESPONDENT GROUNDS OF JUDGMENT Introduction [1] This appeal by the Appellants emanates from the decision of the learned Sessions Court Judge (“LSCJ”) dated 21.3.2022 in dismissing with costs the Appellants’ striking out application of the Respondent’s Writ and Statement of Claim (“SOC”) made under Order 18 r. 19 (1) (b), (c) and (d) of the Rules of Court 2012 (“ROC 2012”). [2] On 24th June 2022, I heard the appeal and dismissed it with costs. These are the reasons for allowing the appeal. S/N okkq5JwfkexOfy4ZVF3Lw [3] In these grounds of judgment, the Appellants and the Respondent will be referred to as they were in the court below as the Defendants and Plaintiff respectively. Background facts [4] The background facts culled from the cause papers show that by an Agreement dated 31.12.2019 (‘the Agreement”), the Plaintiff sold its bar and bistro business to the 1st Defendant for a total sum of RM1,200,000 of which a deposit of RM700,000.00 was paid on the date of execution of the Agreement and the balance sum of RM500,000.00 was to be paid on or before 29.2.2020 - Clause 2.1 (b) of the Agreement. The 2nd and 3rd Defendants executed a guarantee in favour of the Plaintiff to ensure that the balance purchase price shall be paid on the completion date of 29.2.2020. 1st Defendant made a payment of RM100,000.00 on 4.3.2020 leaving a balance sum of RM400,000 unpaid. At the Sessions Court [5] The Plaintiff commenced this action on 14.12.2021 against the 1st Defendant for the balance purchase price of RM400,000 whilst the 2nd and 3rd Defendants are sued as guarantors for the payment of the said sum. [6] The Defendants filed a striking out application against the Plaintiff which was dismissed with costs by the Learned Sessions Court Judge (“LSCJ”). Defendants’ contentions [7] In support of the striking out, the Defendants in essence contended S/N okkq5JwfkexOfy4ZVF3Lw that:

7.1 the Agreement and the Guarantee are sham agreements as the de facto and leqal owner of the Plaintiff is Elite Paradise

7.1.1 Elite Paradise had bought the business vide a Sale and Purchase Agreement dated 18.10.2018 from the then sole-proprietor of Plaintiff known as one Hoo Moon

7.1.2 one “Ong Lian Mee’ was operating Elite Paradise;

7.1.3 the 2nd and the 3rd Defendants have introduced two Chinese Nationals (“investors”) to invest and take over the business from Elite Paradise for a sum of RM 1.2 million;

7.1.4 the investors had utilised undeclared monies for the purchase of the said business and it was Ong Lian Mee who requested the assistance of the Defendants to create the sham agreement;

7.1.5 it was Ong Lian Mee who requested the 2nd and 3rd Defendants to execute the Guarantee although both the 2nd and 3rd Defendants have no interest in the transaction between Elite Paradise and the investors; S/N okkq5JwfkexOfy4ZVF3Lw

7.2 The partners of the Plaintiff’s firm are Chung Fook Vun (‘Chung’) and Wong Hing Twong (‘Wong’); Wong had by a letter dated 7.1.2022 instructed the Plaintiff’s then solicitors to withdraw the action against the Defendants with no liberty to file afresh as the action was instituted by Chung without his consent and knowledge as a partner in the firm. Plaintiff’s contentions [8] The Plaintiff contend that the Defendants’ allegations are baseless and may be summed up as follows:

8.1 The Defendants have not denied signing the Agreement and the Guarantee and as such, the Defendants are bound by the terms and conditions the Agreement and the Guarantee;

8.2 The Defendants having taken over the business as at 31.12.2019, and have been running the business, are estopped from denying the express terms of the Agreement and Guarantee;

8.3 The Agreement also contains an entire agreement clause binding on the parties and prohibits the Defendants from raising matters not stated in the Agreement;

8.4 IF Wong had given instructions to withdraw the suit, firstly, he has no authority to do so and secondly, it is of no benefit to the Plaintiff and the Plaintiff ought to be paid the balance purchase price; S/N okkq5JwfkexOfy4ZVF3Lw

8.5 It is the Plaintiff’s contention that its action is not obviously unsustainable. Court’s analysis and decision [9] I have approached the Appeal by way of a rehearing. As the striking out application was made by the Defendants under limbs (b), (c) and (d) of Order 18 Rule 19 (1), I propose to set out O 18 r 19 ROC 2012 for convenience: “19. Striking out pleadings and endorsements (O. 18 r. 19)

The Court may at any stage of the proceedings order to be struck out or amended any pleading or the endorsement, of any writ in the action, or anything in any pleading or in the endorsement, on the ground that-

it discloses no reasonable cause of action or defence, as the case may be;

it is scandalous, frivolous or vexatious;

it may prejudice, embarrass or delay the fair trial of the action; or

it is otherwise an abuse of the process of the Court, and may order the action to be stayed or dismissed or judgment to be entered accordingly, as the case may be.

No evidence shall be admissible on an application under paragraph (1)(a).

This rule shall, as far as applicable, apply to an originating summons as if it were a pleading.” [10] In considering a striking out, the succinct words of the Federal Court are apposite in Seruan Gemilang Makmur Sdn Bhd v Kerajaan Negeri S/N okkq5JwfkexOfy4ZVF3Lw Pahang Darul Makmur & Anor [2016] 3 MLJ 1; [2016] 3 CLJ 1. In a judgment delivered by Ramly Ali FCJ, the Court said: “[25] The principles for striking out pleadings pursuant to O 18 r 19 of the ROC are well settled. It is only in a plain and obvious case that recourse should be had to the summary process under this rule; and this summary process can only be adopted when it can clearly be seen that a claim on the face of it is obviously unsustainable (see Bandar Builder; Hubbuck & Sons v Wilkinson, Heywood and Clark [1899] 1 QB 86; A-G of Duchy of Lancaster v London and North Western Rly Co [1892] 3 Ch 274). [26] The tests for striking out application under O 18 r 19 of the ROC, as adopted by the Supreme Court in Bandar Builder are, inter alia, as follows:

it is only in plain and obvious cases that recourse should be had to the summary process under the rule;

this summary procedure can only be adopted when it can be clearly seen that a claim or answer is on the face of it ‘obviously unsustainable’ (Emphasis added);

it cannot be exercised by a minute examination of the documents and facts of the case in order to see whether the party has a cause of action or a defence; and

if there is a point of law which requires serious discussion, an objection should be taken on the pleadings and the point set down for argument under O 33 r 3 of the ROC; and

the court must be satisfied that there is no reasonable cause of action or that the claims are frivolous or vexatious or that the defences raised are not arguable. …….. S/N okkq5JwfkexOfy4ZVF3Lw [28] The basic test for striking out as laid down by the Supreme Court in Bandar Builder is that the claim on the face of it must be ‘obviously unsustainable’. The stress is not only on the word ‘unsustainable’ but also on the word ‘obviously’ i.e. the degree of unsustainability must appear on the face of the claim without having to go into lengthy and mature consideration in detail. If one has to go into lengthy and mature consideration in detail of the issues of law and/or fact, then the matter is not appropriate to be struck out summarily. It must be determined at trial. [29] The established rule on this point is that the court should not examine the evidence in this summary proceedings in such a way as to amount to conducting a trial on the conflicting affidavit evidence. As rightly said by Lord Diplock in the House of Lords in American Cyanamid Co v Ethicon Ltd [1975] AC 396 at p 407: … The court no doubt must be satisfied that the claim is not frivolous or vexatious; in other words, that there is a serious question to be tried. It is no part of the court’s function at this stage of the litigation to try to resolve conflicts of evidence on affidavit as to facts on which the claims of either party may ultimately depend nor to decide difficult questions of law which call for detailed argument and mature considerations. These are matters to be dealt with at the trial … “ [11] In examining the parties’ pleadings and assessment of the affidavits, I also found guidance in the approach of the Court of Appeal in Sivarasa Rasiah & Ors v Che Hamzah Che Ismail & Ors [2012] 1 MLJ 473; [2012] 1 CLJ 75 which was cited with approval by the Federal Court in the Seruan Gemilang case - that if there is an issue of fact that is capable of resolution only after taking viva voce evidence during trial, a striking out order should not be made summarily. The same court also stressed that a trial by affidavit ought not to be undertaken, and that a court should not conduct a minute examination of the documents and the S/N okkq5JwfkexOfy4ZVF3Lw facts of the case. The Court in that case held that as long as the claim discloses ‘some cause of action’ or ‘raises some question fit to be tried’ on the face of it, it ought not to be struck out. The fact that the case is weak and unlikely to succeed is insufficient basis to strike out a claim and reiterated the test for striking out as laid down by the Supreme Court in Bandar Builder Sdn Bhd & Ors v United Malayan Banking Corporation Berhad [1993] 3 MLJ 36 that it ought to be ‘obviously unsustainable’. [12] As the Defendants have contended that the Agreement and Guarantee are sham documents, it bears mention that a sham agreement is defined by the House of Lords in AG Securities v Vaughan & Ors [1990] 1 AC 417 where Lord Justice Bingham explained it as follows: “A written agreement is a sham where it incorporates clauses by which neither party intends to be bound and which is obviously a smoke screen to cover the real intentions of both contracting parties: Hadjiloucas v Crean [1987] 3 All ER 1008, 1014, per Purchas LJ. The accepted definition of a sham is that given by Diplock LJ in Snook v London and West Riding Investments Ltd [1967] 2 QB 786, 802: As regards the contention of the plaintiff that the transactions between himself, Auto Finance and the defendants were a ‘sham’, it is, I think, necessary to consider what, if any, legal concept is involved in the use of this popular and pejorative word. I apprehend that, if it has any meaning in law, it means acts done or documents executed by the parties to the ‘sham’ which are intended by them to give to third parties or to the court the appearance of creating between the parties legal rights and obligations different from the actual legal rights and obligations (if any) which the parties intend to create. But one thing, I think, is clear in legal principle, morality and the authorities (see Yorkshire Railway Wagon Co v Maclure (1882) 21 Ch D 309, CA and Stoneleigh Finance Ltd v Phillips [1965] 2 QB 537), that for acts or S/N okkq5JwfkexOfy4ZVF3Lw documents to be a ‘sham’, with whatever legal consequences follow from this, all the parties thereto must have a common intention that the acts or documents are not to create the legal rights and obligations which they give the appearance of creating.”(emphasis added) [13] Having considered entirely the averments in the parties’ affidavits, pleadings, submissions both written and oral, it is manifestly clear to me that the issues raised by the Defendants speak for themselves; at the very least, serious dispute of facts on:

13.1 Whether the Agreement and Guarantee are sham documents;

13.2 Whether Wong did give instructions and IF so whether he has authority to withdraw the action on behalf of the Plaintiff? [14] As alluded to earlier, the Court of Appeal in Sivarasa Rasiah supra pronounced if there is an issue of fact that is capable of resolution only after taking viva voce evidence during trial, a striking out order should not be made summarily. [15] In my respectful view, by the very nature of the disputed facts raised, the subjective intention of the parties has to be examined at trial whether they have intended to create different rights and obligations from those appearing from the Agreement and Guarantee or whether the Agreement and Guarantee are in fact genuine documents but the Defendants are attempting to get out of a bad bargain. These impugned documents are crucial on whether the Plaintiff has a valid cause of action against the Defendants. They go to the root of the Plaintiff’s claim which warrant a trial to determine the truth of the combating allegations and not to be S/N okkq5JwfkexOfy4ZVF3Lw determined merely by what is averred in the affidavits. So too the issue raised relating to Wong’s authority to withdraw the action. [16] The Agreement and the Guarantee prima facie raise a reasonable cause of action, and not giving the Plaintiff the chance to ventilate the matter at trial would be contrary to the basic right of the Plaintiff of having its day in court. Striking out the action will amount to shutting out the Plaintiff, it is drastic and the court should be slow to be so moved. [17] It is trite that the discretionary power to strike out a claim is to be “sparingly exercised” according to the justice of the case. I am of the firm view that striking out the claim in the particular circumstances of this case would be unwarranted. In support, I produce the observations of the appellate courts in just 2 cases. [18] The Federal Court in the case of CC Ng & Brothers Sdn Bhd v Government of State of Pahang [1985] 1 CLJ 235; [1985] CLJ (Rep) 45; [1985] 1 MLJ 347, Seah FCJ exhorted: “The inherent power to dismiss an action summarily without permitting the plaintiff to proceed to trial is a drastic power. It should be exercised with the utmost caution [per Lord Diplock in Tractors Malaysia Bhd v Tio Chee Hing [1975] 2 MLJ 1. In Lawrance v Norreys (1890) 15 App Cas 210, 219 Lord Herschell said words to the same effect that "It cannot be doubted that the Court has an inherent jurisdiction to dismiss an action which is an abuse of the process of the Court. It is a jurisdiction which ought to be very sparingly exercised and only in very exceptional cases. I do not think its exercise would be justified merely because the story told in the pleadings was highly improbable, and one which it was difficult to believe could be proved". (emphasis added). S/N okkq5JwfkexOfy4ZVF3Lw [19] The Court of Appeal in See Thong & Anor v Saw Beng Chong [2013] 3 MLJ 235; [2012] 1 LNS 817 in a judgment delivered by Ramly Ali JCA (as he then was) made the following observations: “[24] Some judges described the power to strike out the plaintiff’s claim as ‘draconian’ — in the sense that the plaintiff is being deprived completely from having his day in the court of law to establish his claim by adducing evidence and calling of witnesses. If not properly exercised, the court in effect is closing its door for the plaintiff to have his recourse to justice. If the application by the defendant is dismissed, the case will still go for trial and the defendant will still have his second bite of the cherry during trial. On the other hand, if the application is allowed and the case is struck out (as in the present case before us) the plaintiff will obviously lose everything, particularly when the plaintiff cannot refile the claim because of limitation issue. … [26] Striking out applications under O 18 r 19(1) of the RHC should not be taken lightly by judges. No doubt, the application is recorded as an ‘interlocutory matter’ in the court dockets, but the effect of the striking out is far more serious and drastic compared to the decision after full trial. In full-trial cases, the plaintiff is given full chance and opportunity to establish and prove his claim before the court of law. However, in striking out proceedings, his claim is struck out even before he has the chance and opportunity to prove his case.” (emphasis added) [20] With the greatest of respect to the Defendants’ counsel, this court is not satisfied and cannot with confidence conclude on the facts of this case, that the Plaintiff’s claim is conspicuously hopeless, or without foundation in law or in equity and as such futile, scandalous, frivolous or vexatious and/or an abuse of court process. The dispute of facts and S/N okkq5JwfkexOfy4ZVF3Lw issues raised in my view, require mature consideration. In my judgment, this is not a plain and obvious case for striking out. [21] It cannot be gainsaid that the Court at this interlocutory stage, is not concerned with the merits of the claim. However weak the case, it is not a good ground for striking out the claim. [22] For the reasons given, I find absolutely no merits in the appeal. I find that the LSCJ has not erred and I affirm her decision in dismissing the Defendants’ application to strike out the Plaintiff’s claim with costs. [23] Accordingly, the Appeal is dismissed with costs subject to allocator. Dated: 19th August 2022 - sgd - ……………………….. Liza Chan Sow Keng Judicial Commissioner High Court of Malaya at Kuala Lumpur COUNSEL: For the Appellants : Domnic Selvam Messrs Domnic Pragasam Tan & Co For the Respondent : S Sivanesan Messrs Nesan Cheng & Co CASES CITED: Seruan Gemilang Makmur Sdn Bhd v Kerajaan Negeri Pahang Darul Makmur & Anor [2016] 3 MLJ 1; [2016] 3 CLJ 1 S/N okkq5JwfkexOfy4ZVF3Lw Sivarasa Rasiah & Ors v Che Hamzah Che Ismail & Ors [2012] 1 MLJ 473; [2012] 1 CLJ 75 Bandar Builder Sdn Bhd & Ors v United Malayan Banking Corporation Berhad [1993] 3 MLJ 36 AG Securities v Vaughan & Ors [1990] 1 AC 417 CC Ng & Brothers Sdn Bhd v Government of State of Pahang [1985] 1 CLJ 235; [1985] CLJ (Rep) 45; [1985] 1 MLJ 347 See Thong & Anor v Saw Beng Chong [2013] 3 MLJ 235; [2012] 1 LNS 817 STATUTE/LEGISLATION REFERRED: Order 18 rule 19 (1) Rules of Court 2012 S/N okkq5JwfkexOfy4ZVF3Lw