Hup Soon Omnibus Co Sdn. Bhd. (898-A) v LIM Chee @ Lam Kum Chee (No. A-02(NCVC)(W)-1677-11/2015)

BUSKERAN A/L MUNUSAMY … APPELLANTS AND LIM CHEE @ LAM KUM CHEE … RESPONDENT (In the High Court of Malaya at Ipoh In the State of Perak Darul Ridzuan, Malaysia Civil Suit No. 22NCVC-132-10/2014 Between Lim Chee @ Lam Kum Chee … Plaintiff And

Hup Soon Omnibus Co Sdn. Bhd. (898-A)

Buskeran a/l Munusamy … Defendants) CORAM MOHD ZAWAWI SALLEH, JCA VERNON ONG LAM KIAT, JCA ASMABI MOHAMAD, JCA (as she then was) JUDGMENT OF THE COURT The Antecedents [1] This is an appeal against the decision dated 17.8.2015 of the High Court at Ipoh (Samsudin bin Hassan J, presiding) granting the respondent’s application for an injunction to hold an EGM to terminate the Management Agreement (“MA”) to manage the business of Hup Soon Omnibus Co. Sdn. Bhd. (898-A) (1st appellant”) and dismissing the appellants’ counterclaim with costs of RM5,000.00. [2] When this appeal was called for hearing before us on 17.8.2016, learned counsel for the respondent raised a preliminary objection stating that this appeal was incompetent as the appellants had failed to comply with the order of the Court of Appeal dated 31.3.2016 which ordered the appellants to pay RM50,000.00 security for costs of the appeal. [3] We upheld the preliminary objection and accordingly ordered that the appeal be struck out from the cause list. [4] We now give our reasons for doing so. Facts of the Case [5] The history of this litigation and the material facts of the case are fully set out in the written submissions filed by the parties and may be summarised as follows:–

5.1. The 1st appellant is a company operating a bus service between Kampar, Bidor, Tapah, Teluk Intan and its surrounding small towns in Perak.

5.2. The 2nd appellant is a shareholder and director of the 1st appellant. The respondent is also a shareholder of the 1st appellant.

5.3. At the directors meeting held on 22.3.2011, there was a proposal for a MA being entered into to manage the 1st appellant. The Board of Directors agreed that the 1st appellant was to be managed by a manager (the respondent) under MA. The resolution was passed and the MA was signed. The respondent immediately took over the management of running of the business of the 1st appellant.

5.4. Then, certain members and directors, including the 2nd appellant, tried to move a resolution to terminate the MA claiming that it was invalid and wrongly entered into and that it was bad for the company.

5.5. The respondent took out a writ of summons vide Ipoh High Court Guaman Civil 22 NCVC-142-2011. After a full hearing, the Court on 10.7.2013 declared that the MA was valid.

5.6. On 23.8.2013, the 2nd appellant together with other directors and some shareholders issued an open letter to the secretary of the 1st appellant requesting for the Board of Directors to call for an EGM. Various allegations were made against the respondent to form a basis to terminate the MA.

5.7. On 30.8.2013, the respondent wrote a reply answering and denying all the allegations levelled against him.

5.8. The appellants did not recall their notice to requisition the EGM and continued to call for on EGM to terminate the

5.9. The respondent filed proceedings in the Ipoh High Court vide Guaman Sivil No: 22NCVC-146-09/2013 for an injunction to stop the proposed EGM. The appellants counterclaimed asking the appellants be allowed to hold the EGM in accordance with Article of Association and the Companies Act 1965. The Court granted the injunction and dismissed the appellants’ counterclaim with costs.

5.10. The 2nd appellant, being a member of the Board of Directors, and in order to frustrate the manager in the management of the 1st appellant, issued various letters to various banks to freeze the account of the 1st appellant and also instructed the secretary to call another EGM to be held on 7.11.2014 to terminate the MA again.

5.11. The respondent then filed proceedings for an injunction and obtained an interim injunction order. The injunction was to be heard inter-parties.

5.12. The respondent also filed an application under Order 14A of the Rules of Court 2012, applied to have the matter decided.

5.13. As alluded to earlier in this judgment, the Court granted the respondent’s application for an injunction and dismissed the appellants’ counterclaim.

5.14. Dissatisfied with the impugned decision, the appellant appealed to this Court.

5.15. Meanwhile, on 31.3.2016, the Court of Appeal granted the respondent’s application for security for costs in the sum of RM50,000.00, to be paid within 14 days of the service of the sealed order.

5.16. The sealed order was served on 14.6.2016 and the last day for payment of the security for costs was 28.6.2016 but up to the date fixed for hearing of the appeal, it has not been paid as ordered by the Court of Appeal. Reasons for Decision [6] On the factual matrix of the present case, it is quite plain to us that the appellants had wilfully breached the 31.3.2016 Order requiring them to deposit RM50,000.00 within 14 days as security for the costs. [7] The appellants had offered no plausible explanation for the breach of the order. In our view, the non-compliance was a wilful and blatant disregard of the order of the Court of Appeal for which sanctions would be justified. [8] The Court will pay particular regard to the paramount importance of securing compliance with its orders. In Stolzenberg and Others v CIBC Mellon Trust Co. Ltd. [2004] EWCA Civ 827, Arden L J said at paragraph 167:- “…Compliance with orders of the court is not a question of judicial amour propre. It goes to the essence of the rule of law that parties subject to the court’s jurisdiction…should comply with the court’s orders. The gravity of the matter of non-compliance is plainly increased where the non-compliance results from a conscious decision, as in this case. It follows, as Ward LJ said in Hytec Limited v Coventry City Council [1997] 1WLR 1666 at 1674 to 1675, that, ‘If a party intentionally or deliberately... flouts the order, he can expect no mercy’. He has to persuade the court that in all the circumstances the injustice to him outweighs the interests of the administration of justice and the injury to the other party.’ [9] In this regard, it is pertinent to note that respondent had given 3 signed cheques to the 1st appellant’s director for the payment of the amount of security of costs, but to date it has not been paid as ordered by the Court of Appeal. This clearly demonstrates that the appellants’ breach has been conscious and deliberate. The appellants did not seek leave of the Court for extension of time for the furnishing of security for costs. [10] Undaunted, learned counsel for the appellants now argues that an order of striking out is unjustified in the present case because the 31.3.2016 Order is not an “unless order”. With respect, we disagree. In the case of Stolzenberg and Others v CIBC Mellon Trust Co. Ltd. (supra) there was an appeal against the refusal by a Judge to grant the defendants relief from an order which debarred them from defending the action unless they complied with various orders including one relating to discovery, which they had previously disobeyed. Arden LJ in her judgment referred to a number of cases in support of the following propositions:-

(i) That non-compliance with an unless order particularly if intentional, was a factor to be taken into account in determining whether a Judge should make an order striking out a party’s case; and