Kwang Ee Fu [Pentadbir harta pustaka Kwang Keh Chong, Si Mati] v HO HAU WONG (WA-24NCC-279-06/2024)

The 1st to 5th Defendants apply to strike out this Originating Summons filed by the Plaintiffs against them. The Defendants claim that the claim against them is frivolous, vexatious and is an abuse of process of this Court. S/N ZCn3f989sEap9j0piJMqSg  B.

The 1st Plaintiff is the registered owner or at the very least beneficial owner of 16, 075 shares in the 14th Defendant and 164, 225 shares in the 15th Defendant.

The 2nd Plaintiff is the registered owner of 663, 125 shares in the 13th Defendant. The 2nd Plaintiff holds 44.2% shares in the 13th Defendant.

The Plaintiffs seek to set aside the Judgment of the High Court obtained by the 1st to 5th Defendants in the suit bearing number WA- 22NCC-14-01/2020. The grounds for the said right to set aside the Judgment of the High Court is premised on the following: -

That the Plaintiffs' legal and pecuniary interests as shareholders of the 13th to 16th Defendants were affected by S/N ZCn3f989sEap9j0piJMqSg  the Judgment of the High Court.

(ii) That the judgment effects the rights of the Plaintiffs as shareholders of the 13th to 16th Defendants.

(iii) That the judgment is allegedly contrary to section 340 of the National Land Code.

(iv) That there is a breach of natural justice as the Plaintiffs were not named as the Defendants in the suit bearing number WA-22NCC-14-01/2020.

That the Plaintiffs had paid the development costs and redemption of the lands that are subject to the orders of the Court in the suit bearing number WA-22NCC-14-01/2020.

(vi) That the purchase of the shares by the Plaintiffs in the said companies are premised on the value of the lands held in the 13th to 15th Defendants. Therefore, as the lands are now held on trust for the Plaintiffs, this will impact the Plaintiffs as the value of the shares will be reduced and that the said companies are incorporated solely for the purposes of holding the said land and their eventual development. C. APPLICABLE LEGAL PRINCIPLES S/N ZCn3f989sEap9j0piJMqSg 

The applicable law on striking out a Statement of Claim or any pleading under Order 18 rule 19 of the Rules of Court 2012 is trite and is summarized as follows: -

The Court must consider whether an applicant could show that it is a plain and obvious case that recourse should be had to the said process under the above-referred rule and that the claim on the face of the document is “obviously unsustainable”;

(ii) A striking out is not a trial on affidavits and the Court should not conduct a minute examination of the documents through the affidavit. As long as there is a valid claim on the face of the pleadings or raises some questions fit to be tried it should not be struck out.

(iii) A striking out order should not be entered if there is an issue of law that requires lengthy argument and mature consideration especially when the issue requires deliberation after taking evidence at trial. S/N ZCn3f989sEap9j0piJMqSg 

I am guided by the decisions of our Superior Courts in Bandar Builder Sdn Bhd & Ors v United Malayan Banking Corporation Bhd [1993] 4 CLJ 7, Sivarasa Rasiah Ors v Che Hamzah Che Ismail & Ors [2012] 1 CLJ 75 and Om Cahaya Mineral Asia Bhd v Damansara Realty (Pahang) Sdn Bhd [2018] 5 CLJ 587.

I make specific reference to the often-quoted judgment of the Court of Appeal in Sivarasa Rasiah v Che Hamzah Che Ismail (supra) and Bandar Builder Sdn Bhd v United Malayan Banking Corporation Bhd (supra). If the pleadings disclose a reasonable cause of action and if it could be shown that there are “issues of law that need to be elaborated and argued in great detail and for mature consideration”, then this Court should not strike out the suit.

If there are relevant factual issues that require deliberation of the facts through witnesses, the power under Order 18 rule 19 should not be utilised. S/N ZCn3f989sEap9j0piJMqSg 

However, I am mindful of my duty to consider the claim and the affidavit evidence in totality to determine whether there exists a reasonable cause of action that ought to be referred to at trial.

I refer to the judgment of Mohd Azmi SCJ in Bank Negara Malaysia v Mohd Ismail Ali Johor & Ors [1992] 1 CLJ Rep 14, where his Lordship quoted the judgment of the Privy Council in Eng Mee Yong v Letchumanan [1979] 1 LNS 18: “Although in the normal way it is not appropriate for a Judge to attempt to resolve conflicts of evidence on affidavit, this does not mean that he is bound to accept uncritically, as raising a dispute of fact which calls for further investigation, every statement on an affidavit however equivocal, lacking in precision, inconsistent with undisputed contemporary documents or other statements by the same deponent, or inherently improbable in itself it may be.” D. DECISION OF THIS COURT – STRIKE OUT THE ORIGINATING SUMMONS S/N ZCn3f989sEap9j0piJMqSg 

After considering the written submissions, the pleadings filed and the affidavits before this Court, I find that this is a suitable case for the power to strike out the claim against the said Defendants should be exercised.

Res Judicata – No Legal Interest Established 12. Firstly, the said Plaintiffs admit candidly before this Court that they did apply to intervene in the proceedings in the suit bearing number WA- 22NCC-14-01/2020.

In the said application to intervene, similar grounds were raised by the Plaintiffs were utilized by them to justify to be added as co-defendants to the said suit and their eventual attempt to set aside the order of Court.

This application was dismissed by the learned Judge in the said suit and there was no appeal against the said decision. Therefore, the Plaintiffs would have accepted that they do not have any legal interest in the said proceedings justifying being added as a co-defendant to the said suit. S/N ZCn3f989sEap9j0piJMqSg 

It is trite law now that any person that have a legal interest in a matter may intervene in a proceeding at any stage even after judgment has been entered. More so where it is shown that the order was made without any adequate notice being extended to such persons and that the said order will have an adverse effect on such persons. See Dr Lourdes Dava Raj Curuz Durai Raj v Dr Milton Lum Siew Wah & Anor [2020] 9

However, it must first be shown to the High Court that the persons applying to intervene have a legal interest in the suit. This cannot be merely a financial interest. He or she may suffer financially as a result of the decision of the Court, but if no legal interest is shown in the said application then the Court must not allow the said application. I refer to Lee Meow Lim v Lee Meow Nyin [1990] 3 MLJ 123, Soo Hong & Leong Kew Moi & Ors v United Malayan Banking Corp Bhd & Anor [1997] 2 CLJ 548 and Dato’ Suhaimi bin Ibrahim & Ors v Konsortium Lapangan Terjaya Sdn Bhd and other appeals [2014] 4 MLJ 419.

This test is best described by the decision of Lord Diplock in Pegang Mining Company Ltd v Choong Sam & Ors [1968] CLJU 96:- "It has been sometimes said as in Moser v. Marsden [1892] 1 Ch 487 and Re LG Farbenindustrie AG [1944] Ch 41 that a party may be added if his legal interests will be affected by the judgment in the action but not if his commercial interests only would be affected. While their Lordships agree that the mere fact that a person is likely to be better off financially if a case is decided one way rather than another is not a sufficient ground to entitle him to be added as a party, they do not find the dichotomy between "legal" and "commercial" interests helpful. A better way of expressing the test is: will his rights against or liabilities to any party to the action in respect of the subject matter of the action be directly affected by any order which may be made in the action?”

Therefore, I find that the High Court in the earlier suit had found that the Plaintiffs have failed to show that his rights against or liabilities to any party to the action in respect of the subject matter will be directly affected by the order of Court. They may suffer financially as a result of the said decision as the value of the shares bought may fall due to the loss of the S/N ZCn3f989sEap9j0piJMqSg  lands held in the said companies, this does not mean that they have any legal standing to be added a claim to the suit.

This to mean shows that the said Plaintiffs did not have any locus standi to be part of the claim and were not legally impacted by the outcome of the suit. As shown in the affidavits filed by the litigants, the said Plaintiffs are only shareholders and contributors to the capital of the said company. Whatever advances that the Plaintiffs have made to the development costs or the redemption of the said lands, will only be considered as either a debt owed by the companies to the Plaintiffs or as part of their capital contribution to the company.

Neither have the Plaintiffs claimed that they have any legal or equitable interests in the said lands. The monies paid by them to purchase the shares or for the development of the companies were not paid in return for any share of the portion of the land. They have not pleaded that they have any legal or equitable interests on the land. Their only claim is that (i) the value of the said shares purchased by them were premised on the value of the lands held by the companies and (ii) that the Plaintiffs did contribute to the development of the lands or the redemption S/N ZCn3f989sEap9j0piJMqSg  of the lands from the financial institutions.

As the Plaintiffs do not have any legal interest and are not allowed to intervene, they also do not have any legal right to set aside the Judgment of the High Court. They are mere strangers to the suit or what are best described as busy bodies. To allow their application to continue will be inconsistent with the earlier judgment of the Court that was not appealed from.

In the circumstances, as the Plaintiffs do not have any locus standi to even intervene in the earlier proceedings, it cannot be said that they have any bona fide interest to now set aside the said orders of Court. They have failed to show any legal interests to intervene and have even failed to pass this important first hurdle. They may be financially affected by the said order of the Court but that does not create locus standi to initiate this claim against the above referred Defendants or even to set aside the order of the earlier Court.

In the circumstances, I find that the Originating Summons is an abuse of process of this Court and should be struck out. I find that as the S/N ZCn3f989sEap9j0piJMqSg  Plaintiffs did not appeal against the said decision not allowing intervention, they are bound by the order of the Court and do not have any locus standi to even institute this claim concerning the same order.

(ii) No Valid Cause of Action – Reflective Loss Does Not Justify A Badiaddin Type Claim / No Locus Standi and No Breach of Natural Justice 24. I also find that the claim as it appears in the Originating Summons is bound to fail and that the Plaintiffs have no locus standi to institute the claim against the said Defendants.

The Plaintiffs claim is premised on the following:-

They are shareholders of the companies that own the lands. The registered owners of the lands are the said companies.

(ii) The Plaintiffs did purchase the shares in the said companies based on the value of the said lands. S/N ZCn3f989sEap9j0piJMqSg 

(iii) The Plaintiffs had paid for the development and redemption costs of the said lands on behalf of the companies. In other words, it would be unfair for the Defendants to now own the lands as they had incurred substantial sums to the amount of RM 3,000,000.00 to develop and pay the financial institutions on behalf of the said companies.

It is trite law that a shareholder of a company does not have any interest, either legal or equitable over the properties held by the company. Please see Tai Choi Yu v Syarikat Tingan Lumber Sdn Bhd [1998] 4

When I peruse the affidavits affirmed by the Plaintiffs, I find that their main complaint concerns the loss of the lands that are held in the name of the companies. They allege that they had purchased these shares based on the value of the said lands and that they had contributed to the redemption and the development of the said lands. The sums of RM 3,000,000.00 were paid by the Plaintiffs on behalf of the said companies to develop and redeem the lands from the financial institutions. S/N ZCn3f989sEap9j0piJMqSg 

I do not find that the above fall within any of the categories of cases that justify the setting aside of an order of Court that was made after a trial as laid down in Badiaddin bin Mohd Mahidin & Anor v Arab Malaysian Finance Bhd [1998] 1 MLJ 393.

Firstly, the fact that the shares in the said companies were purchased based on the value of the lands do not change the order of Court. Even if the Plaintiffs are correct, this would only mean that they may have a claim against those who sold the shares to them and whether there was any misrepresentation at the time the said shares were sold to the Plaintiffs. This does not change the issues that were decided by the High Court in the earlier suit.

I also do not find that this allegation justifies the Plaintiffs’ claim that there is any breach of natural justice and that the existence of any bona fide right to have the earlier order be set aside based on the principles laid down in Badiaddin bin Mohd Mahidin & Anor v Arab Malaysian Finance Bhd (supra). I find the Plaintiffs have only shown that they are S/N ZCn3f989sEap9j0piJMqSg  merely shareholders in the said companies. Their alleged losses in the form of any diminution in the value of their shares are their personal loss. This does not fall within the scope of breach of natural justice as described by the Federal Court in the earlier cited case.

Even if the Plaintiffs contention is to be accepted, the right to raise such issues lies solely with the companies. The Plaintiffs losses are separate and distinct loss to those of the companies. The loss of the said lands is attributable solely to the development companies. As such, I opine the Plaintiffs as shareholders to the said companies are not entitled to rely on the principles laid down in Badiaddin to institute a claim to set aside the order of another High Court. The order of the High Court did not legally affect them and they cannot therefore apply to set it aside.

I refer to decision of the Court of Appeal in Mak Siew Wei v Yeoh Eng Kong & other appeals [2019] 7 CLJ 470 where Nallini Pathmanathan JCA (as she then was) held: - “[38] The loss suffered by a company is separate, distinct and disparate from that suffered by a shareholder. As a consequence, the nature of the claim brought by a shareholder for loss suffered S/N ZCn3f989sEap9j0piJMqSg  personally or qua shareholder, is completely different and distinct from that brought by a shareholder on behalf of the company for losses suffered by the latter. [39] This principle is known as the rule against reflective loss. The genesis of the rule against reflective loss is the decision of the English Court of Appeal in Prudential Assurance v. Newman Industries No. 2. ….. [41] The loss suffered by the shareholder is reflective loss, ie, loss reflective of the loss actually suffered by the company. The shareholder does not suffer actual loss. To that extent, a personal action brought by a shareholder in respect of losses suffered by him personally cannot be equated with a derivative action brought by the same shareholder on behalf of the company to enable the company to recover its losses suffered by acts or omissions committed by (generally) the majority wrongdoers in control of the company. S/N ZCn3f989sEap9j0piJMqSg  …. [44] The distinction between the company's losses and a shareholder's loss are therefore clear. The rights in respect of which a personal action may be brought are methodically and meticulously set out in Chapter 12 of the textbook entitled Corporate Powers: Accountability by Loh Siew Cheang (3rd edn, published by Lexis Nexis). In relation to the nature of the shareholder's personal action the learned author states: 12-4 In a personal action, the allegation is that the wrongdoing in question is an invasion of rights that belong to the plaintiff individually and in his personal capacity as a member. Hence, unlike a derivative action relief is asked against the company in a personal action. The company is not merely a nominal defendant... S/N ZCn3f989sEap9j0piJMqSg  [45] As submitted by learned counsel for the tenth defendant, the rule against reflective loss has been followed in Malaysia. In Rinota Construction Sdn Bhd v. Mascon Rinota Sdn Bhd & Ors [2018] 2 CLJ 129; [2018] 1 MLJ 141 ('Rinota ') the Federal Court referred to the decision of the House of Lords in Johnson v. Gore Wood (above): The position is, however, different where the company suffers loss caused by the breach of duty owed both to the company and to the shareholder. In such a case, the shareholder's loss, in so far as this is measured by the diminution in value of his shareholding or the loss of dividends, merely reflects the loss suffered by the company in respect of which the company has its own cause of action. If the shareholder is allowed to recover in respect of such loss, then either there will be double recovery at the expense of the defendant or the shareholder will recover at the expense of the Company and its creditors and other shareholders. Neither course can be permitted. This is a matter of principle; there is no discretion involved. Justice to the defendant requires the exclusion of S/N ZCn3f989sEap9j0piJMqSg  one claim or the other; protection of the interests of the company's creditors requires that it is the company which is allowed to recover to the exclusion of the shareholder. (emphasis added).”

I am guided by the decision of the Federal Court in Low Cheng Teik & Ors v Low Ean Nee [2024] 9 CLJ 171 where Nallini Pathmanathan FCJ held: - “[131] It follows that the respondent is entitled to seek leave to commence a derivative action on behalf of the company against the wrongdoer(s) under s. 347 as was initially intended by the respondent. This in turn means that the respondent's claim in respect of the assignment of the SNE trademarks cannot be properly pursued by way of an oppression action. [132] The proper plaintiff in this case is the company. Any loss suffered by the respondent as a result of the assignment of the SNE trademarks would be a loss in either the capital value of her shareholding or a loss in the dividends distributable to her. This is reflective loss in that it reflects the loss sustained by the company to S/N ZCn3f989sEap9j0piJMqSg  the extent of her shareholding in the company. It cannot constitute a separate and distinct injury resulting in a loss to the respondent in her capacity as a shareholder. As all other shareholders suffer the same loss as a consequence of this wrongful act, it cannot be said that the loss or injury suffered by the respondent is singular and distinct. As the wrongful act was found to be that of the first appellant, it cannot also be said that the respondent has been unfairly prejudiced by the conduct of the majority shareholders. [133] The rule against reflective loss as set out earlier in the judgment therefore bolsters our determination that the respondent ought not to bring an action in her capacity as a shareholder. And this in turn is because the cause of action vests in the company and not the respondent. This claim should not have been brought by way of an oppression action under s. 346. This is not to say that there was no wrongdoing, as indeed there was, but such wrongdoing was done to the company and should have been pursued under s. 347 as a derivative action.” S/N ZCn3f989sEap9j0piJMqSg 

Although the cited case concerns the distinction between a claim for minority oppression and that of a derivative action, the said case shows that a shareholder’s losses that arose as a result of diminution in the value of the capital of the company must be distinguished to those suffered by a wrong to the company. This is also applicable to the facts at hand. The party who should be raising all these issues should be the companies that are legally affected by the orders of the High Court. These are issues that should be raised by the said companies in the earlier suit or at the appeal.

Even if the said illegality issue raised by the Plaintiffs are correct, then it is the companies that should be applying by way of a fresh suit to set aside the said alleged tainted order of Court. It is not for the shareholders to lodge a separate claim. Otherwise, this would mean that in any claim against any company, proceedings should be made not only against the company but also include all shareholders and potentially directors of such companies. I opine that the Plaintiffs have misunderstood the applicable legal principles and they simply do not have a valid legally recognized cause of action against the 1st to 5th Defendants. S/N ZCn3f989sEap9j0piJMqSg 

I refer to the decision of Hishamuddin Mohd Yunus JCA in North Plaza Sdn Bhd v United Securities Sdn Bhd [2010] 1 CLJ 470. I note that the said decision concerns an application to remove a caveat filed pursuant to section 327 of the National Land Code. However, I find that the principles laid down in that case is applicable to the facts before me.

In that case, Hishamuddin Mohd Yunus JCA held: - “[22] But the fact remains that the respondent is not the registered owner of the parcels of land in respect of which the caveats are lodged. The registered owner, as has been pointed out earlier, is CCSB. It is an elementary principle of company law that a company (and in the context of the present case, it is CCSB) is a legal entity which is independent and separate from its shareholders. It therefore follows that the respondent, having merely a beneficial interest in the shares of CCSB, does not have any proprietary rights (either legal or equitable) over the parcels of land (Macaura v. Northern Assurance Co Ltd [1925] AC 619; Abdul Aziz Atan & Ors v. Ladang Rengo Malay Estate Sdn Bhd [1985] 1 CLJ 255; [1985] S/N ZCn3f989sEap9j0piJMqSg  CLJ (Rep) 370). Hence, the respondent is not an aggrieved person (or body) in relation to the parcels of land and the caveats for the purpose of s. 327(1) of the NLC; and the legal position would still be the same even if the respondent were to be the registered shareholders of those shares. In our view, if at all any party is aggrieved by the existence of the caveats, it would be CCSB and not the respondent. Since the respondent is not an aggrieved person, they have no locus standi to make the application under s. 327(1) of the NLC.”

Therefore, the fact that the value of the Plaintiffs are shareholders in the said companies and that their shares may be reduced as a result of the order of the Court does not mean that they were wrongly not added as parties to the suit and the order made is in breach of natural justice. Their losses, if any, are merely a diminution of the value of their shares in the companies. This does not mean that there was any breach of natural justice by the Defendants' decision not to add them as litigants in the said suit. For all intents and purposes, the Plaintiffs do not have to be added as litigants in the said suit. It is the companies who own the said lands who will have the right to oppose the said proceedings and even appeal on the grounds put forth by the Plaintiffs. S/N ZCn3f989sEap9j0piJMqSg 

I also find that the Plaintiffs complaints as to the expenses paid on behalf of the company for the development costs of the said lands and how the said Defendants may be unlawfully enriched at their expense are issues that should be raised by the said companies at the said trial or at the upcoming appeal. These are issues that were known to the said companies and are still available to them. It is not for the Plaintiffs to raise these defences on behalf of the companies. The said companies are aware of what was paid on their behalf by the said companies and should therefore have raised these issues at the trial before the High Court in the earlier suit.

An essential principle that the Plaintiffs’ counsel missed in understanding the scope of the right of a party to set aside the order of another High Court on the grounds laid down in Badiaddin is that the person must have locus standi to institute the claim. The person must be legally affected by the decision of the previous Court that he or she alleges is tainted with illegality or tainted by fraud or tainted by coram failure or such other valid grounds. S/N ZCn3f989sEap9j0piJMqSg 

I reproduce the judgment of Mohd Azmi FCJ in Badiaddin Mohd Mahidin & Anor v Arab Malaysian Finance Bhd (supra): - “…But one special exception to this rule (which was not in issue and therefore not discussed in Hock Hua Bank) is where the final judgment of the High Court could be proved to be null and void on ground of illegality or lack of jurisdiction so as to bring the aggrieved party within the principle laid down by a number of authorities culminating in the Privy Council case of Isaacs v. Robertson [1985] AC 97 where Lord Diplock while rejecting the legal aspect of voidness and voidability in the orders made by a court of unlimited jurisdiction, upheld the existence of a category of orders of the court "... which a person affected by the order is entitled to apply to have set aside ex debito justitiae in the exercise of the inherent jurisdiction of the court, without his needing to have recourse to the rules that deal expressly with proceedings to set aside orders for irregularity, and give to the judge a discretion as to the order he will make. S/N ZCn3f989sEap9j0piJMqSg  The Privy Council through Lord Diplock also emphasised that the courts in England have not closed the door as to the type of defects in the final judgment of the court that can be brought into the category that attracts ex debito justitiae the right to have it set aside without going into the appeal procedure, "save that specifically it includes orders that have been obtained in breach of rules of natural justice". Similarly, in this country the statement of Abdoolcader J (as he then was) in Eu Finance Berhad v. Lim Yoke Foo [1982] 2 MLJ 37 @ 39 provides the correct guideline on the subject: The general rule is that where an order is a nullity, an appeal is somewhat useless as despite any decision on appeal, such an order can be successfully attacked in collateral proceedings; it can be disregarded and impeached in any proceedings, before any court or tribunal and whenever it is relied upon - in other words, it is subject to collateral attack. In collateral proceedings the court may declare an act that purports to bind to be non-existent. S/N ZCn3f989sEap9j0piJMqSg  In Harkness v. Bells' Asbestos and Engineering Ltd. [1967] 2 QB 729, 736 Lord Diplock LJ (now a Law Lord) said (at p. 736) that 'it has been long laid down that where an order is a nullity, the person whom the order purports to affect has the option either of ignoring it or of going to the court and asking for it to be set aside'.”

This is also apparent from the facts of Badiaddin. The appellants in that case were registered co-owners of the Malay reservation land. Their business associate, one Ismail Omar needed funds and the appellants agreed to charge the said land in favour of the loan granted to Ismail Omar. This was a third-party charge granted by the co-landowners in favour of a loan granted to Ismail.

It was subsequently found that the bank was not listed as a company recognized to be a Malay under the Malay Reservation Enactment and therefore the charge was found to be defective in law. As such, despite the existence of the previous order for sale by the High Court, the co-owners of the land had a legal right to file a new suit to set aside the previous decision of the High Court granting the order for sale as it was premised on an unlawful act. The appellants who were the registered co-owners of the land were legally affected by the order for S/N ZCn3f989sEap9j0piJMqSg  sale and had a legitimate right to apply to set it aside on grounds of illegality. They were not shareholders or directors of the entity that owned the land. The extent of the right to set aside the said order for sale surely did not extend that far.

I further find that the Plaintiffs had wrongly relied on sections 8, 71 and 101 of the Companies Act 2016. These statutory provisions do not justify setting aside the order of Court in the earlier suit. The distinction between assets that are owned by the company and the shareholders remains. The Plaintiffs’ rights as shareholders do not mean that they have any legal interest to the assets of the companies. The referred provisos do not assist the Plaintiffs in any way whatsoever in their attempt to set aside the earlier order of Court.

(iii) The Companies should raise the issues at the High Court of the Court of Appeal 45. Finally, I also find that the issue concerning the alleged illegality under section 340 of the National Land Code are issues that should have been argued by the companies in the earlier proceedings and continues to be available before the Court of Appeal. It is for the S/N ZCn3f989sEap9j0piJMqSg  companies at issue to put forth these arguments before the High Court after hearing the trial.

I also note that the Plaintiffs have also not pleaded any claim that they have any legal interest in the said lands. The rights to the said lands belong to the company and the Plaintiffs have no legal interest in the said lands.

For the above reasons, I find that the issues concerning the said lands and the validity of the decision of the High Court for reasons relating to an alleged breach of section 340 of the National Land Code must be brought forth solely by the companies and not by the shareholders of the said entities. The value of the shares held by the shareholders may be affected by the orders of the Court concerning the said companies; this does not mean that the shareholders have a legitimate claim recognized in law that allows them to file a claim to now set aside the said orders. The right to institute a Badiaddin claim as attempted in this suit simply fails as the Plaintiffs lack locus standi to do so. S/N ZCn3f989sEap9j0piJMqSg 

I refer to the decision of the Court in Dato’ Idrus bin Zainol & Anor v Integrated Formation Sdn Bhd & Ors [2022] MLJU 1378: - “a. In this case, the evidence shows that the 1st Defendant is the registered owner of the said Land and Assets in question. It is settled and trite law, a company is a completely separate and distinct entity from its directors and shareholders. A company is “an independent person with its rights and liabilities appropriate to itself” [see: Aron Salomon (Pauper) v A Salomon and Company, Limited (supra)]. The concept of the separate legal entity of a company is long established and this principle is followed by a plethora of cases in our Courts. b. The company has its own assets and liabilities which belong to the company, and the company can sue and be sued in its own name distinct from its shareholders. In Johnson v Gore Wood & Co (supra) the House of Lordsheld: - “A company is a legal entity separate and distinct from its shareholders. It has its own assets and liabilities and its own creditors. .The company’s property belongs to the company and not to its shareholders. If the company has a cause of S/N ZCn3f989sEap9j0piJMqSg  action, this is a legal chose in action which represents part of its assets. Accordingly, where a company suffers loss as a result of an actionable wrong done to it, the cause of action is vested in the company and the company alone can sue. No action lies at the suit of a shareholder suing as such, though exceptionally he may be permitted to bring a derivative action in right of the company and recover damages on its behalf…” c. I agree that the Plaintiffs have no locus standi to initiate this action. It is undisputed that the Plaintiffs are not the registered owners of the said Land and Assets and therefore the Plaintiffs as the directors and shareholders of the 1st Defendant do not have any interest legal or equitable in the 1st Defendant’s property and assets….” Also refer to Genting Developments Sdn Bhd v Lim Chee Wah [2019]

Even if the Plaintiffs’ contention is to be accepted that the order made by the learned Judge in the earlier suit was made in contravention S/N ZCn3f989sEap9j0piJMqSg  of the National Land Code as suggested in its Originating Summons, I opine that this issue should be raised in the pending appeal by the company.

(iv) No breach of the National Land Code 50. I also note that the decision of Justice Ong Chee Kwan dated 12-1- 2024 only states that the lands held by the 8th, 9th and 10th Defendants are held on trust for the Plaintiffs in the suit bearing number WA-22NCC- 14-01/2020 and that the said lands are to be transferred into the names of the said Plaintiffs in that suit.

The Plaintiffs’ counsel suggests in the written submissions that his clients’ claim is premised on an alleged breach of section 340(1) of the National Land Code. He suggests that the title held by the said companies should not be interfered with or set aside by the order of the Court as the said title are perfected and are not tainted by fraud or illegality recognized by section 340(3) of the National Land Code. S/N ZCn3f989sEap9j0piJMqSg 

I opine that Justice Ong Chee Kwan’s judgment did not in any way contravene section 340 of the National Land Code or any other proviso of the National Land Code. Section 340 of the National Land Code is reproduced for ease of reference: - “(1) The title or interest of any person or body for the time being registered as proprietor of any land, or in whose name any lease, charge or easement is for the time being registered, shall, subject to the following provisions of this section, be indefeasible.

The title or interest of any such person or body shall not be indefeasible—

in any case of fraud or misrepresentation to which the person or body, or any agent of the person or body, was a party or privy; or

where registration was obtained by forgery, or by means of an insufficient or void instrument; or S/N ZCn3f989sEap9j0piJMqSg 

where the title or interest was unlawfully acquired by the person or body in the purported exercise of any power or authority conferred by any written law.

Where the title or interest of any person or body is defeasible by reason of any of the circumstances specified in subsection (2)—

it shall be liable to be set aside in the hands of any person or body to whom it may subsequently be transferred; and

any interest subsequently granted thereout shall be liable to be set aside in the hands of any person or body in whom it is for the time being vested: Provided that nothing in this subsection shall affect any title or interest acquired by any purchaser in good faith and for valuable consideration, or by any person or body claiming through or under such a purchaser. S/N ZCn3f989sEap9j0piJMqSg 

Nothing in this section shall prejudice or prevent—

the exercise in respect of any land or interest of any power of forfeiture or sale conferred by this Act or any other written law for the time being in force, or any power of avoidance conferred by any such law; or

the determination of any title or interest by operation of law.”

I find that Justice Ong Chee Kwan’s order did not declare that the title held by the said companies was fraudulently entered or defeasible. The registration of the said lands in the name of the said companies remains but the said lands should now be held on trust for the said Plaintiffs in the said suits due to the claims alleged by the said Plaintiffs and thereafter be transferred into the names of the said litigants. S/N ZCn3f989sEap9j0piJMqSg 

The application of equitable rights into our National Land Code is nothing new. Our Courts have found that the existence of a codified land that incorporates the “curtain” and “mirror” principles do not in any way prevent the application of equitable principles where they are necessary or deem fit based on the facts of each case. They are easy bedfellows. This can be seen in the decision of Azlan Shah J (as he then was) in Munah v Fatimah [1968] 1 MLJ 54, Kersah La’uisn v Sikin Menan [1964] CLJU 57 and by the Federal Court in Othman and another v Mek [1972] 2 MLJ 158.

In Kersan La’usin v Sikin Menan (supra) Raja Azlan Shah J (as he then was) held:- “The next question is: what significance does such a contract possess under a system of law requiring registration of title? In both the Privy Council decisions it was held that an unregistered transfer of land gives the purchaser a right which rests in contract: Loke Yew v. Port Swettenham Rubber Co. [1913] AC 491 Haji Abdul Rahman & Ors. v. Mohamed Hassan [1917] AC 209. In 1952 Pretheroe A-G CJ in delivering a judgment of the Court of Appeal in Haji Osman bin Abu Bakar v. Saiyed Noor [1952] MLJ 37 p. 38 applied the principle S/N ZCn3f989sEap9j0piJMqSg  enunciated in Loke Yew's case. In 1956, Thomson J (as he then was) in his usual way, stated the matter emphatically and concisely in Bachan Singh V. Mahinder Kaur & Ors. [1956] CLJU 14; [1956] 1 LNS 14 at p. 98: Where there is a valid binding contract for the sale of land, the purchaser, when he has performed his side of the contract, acquires a right ad rem which in also a right in personam. In other words, he acquires a right to the land as against the vendor personally but not good against the world as a whole and, in due course, that right can become a real right good against the world as a whole on registration in accordance with the Land Code which has the same effect in our law as appearance before the Praetor in the law of Rome, delivery of seisin in the old English feudal law and infeftment by registration in the Register of Sasines in the modern Scots law,"

Therefore, having perused the originating summons and the affidavits filed by the Plaintiffs in this suit, I do not see any valid cause of S/N ZCn3f989sEap9j0piJMqSg  action that is premised on the alleged breach of the National Land Code. An equitable right may still be found and enforced against the registered owner of a piece of land, if the circumstances of the case justify it.

I therefore find that this claim is an abuse of process and should be struck out by this Court. The Plaintiffs have failed to show the existence of a reasonable cause of action against the said Defendants. This is a suitable case for the exercise of the powers reposed in the Court to strike out the claim against the Defendants in accordance with Order 18 rule 19 of the Rules of Court 2012. E.

For the above reasons, the Originating Summons against the said Defendants are struck out with costs. Dated 26th November 2024 Dato’ Indera Mohd Arief Emran bin Arifin Judge High Court of Malaya at Kuala Lumpur S/N ZCn3f989sEap9j0piJMqSg  NCC 5 Counsel : Lau Zhong Yan together with O Ying Xin for the Plaintiffs Messrs. Tuang, Chu & Co. Advocates & Solicitors Yasinthra Dorairaju together with Dato’ C Vignesh Kumar and Rubanyah Sedopathy for the 1st to 5th Defendants Messrs. Vignesh Kumar & Associates Advocates & Solicitors Raymond Mah together with Sebastian Liew and Jasmine Wee for the 6th to 16th Defendants