Loh Kon Fah v Ahmad Rizam Bin Zamri (AA-22NCvC-58-07/2023)

AHMAD RIZAM BIN ZAMRI

MUSTAFA BIN BAHARUDIN

TEH CHEE YIP

MEOR MUHAMMAD HAFIFI BIN HAMZAH 25

LOH FOOK WAH @ LOH FOOK FAH (NO. K/P: 570816-08-5831) 30

LOH KWOK YUAN

CHIN YOKE CHING (NO. K/P: 730321-08-6138) DEFENDANTS 35 GROUNDS OF JUDGMENT 06/02/2024 10:42:25 AA-22NCvC-58-07/2023 Kand. 49 Introduction [1] The Plaintiff and the Defendants in the present suit (AA-22NCvC- 58-07/2023) and suit have filed 40 interlocutory applications and they are as follows: AA-22NCvC-58-07/2023 Plaintiff: Encl 2 (injunction) Plaintiff: Encl 2 (injunction) 1st, 2nd, 3rd, 4th, 6th, and 7th Defendants: Encl 9 (striking out) 1st, 2nd, 3rd, 4th, 6th, and 7th Defendants: Encl 13 (striking out) 5th Defendant : Encl 33 (striking out) 5th Defendant : Encl 35 (striking out) [2] The Plaintiff filed an injunction application in Enclosure 2 and the 1st, 2nd, 3rd, 4th, 6th, and 7th Defendants filed an application in Enclosure 9 to strike out the Writ of Summons. The 5th Defendant 45 followed suit by filing a similar application in Enclosure 33. In suit AA-22NCvC-59-07/2023, similar applications were filed by the parties, as shown in the table above. The applications to strike out the Plaintiff's Writ of Summons and/or the action in its entirety are based on the grounds that they disclose no reasonable cause of 50 action, constitute an abuse of court process, and lack the required leave pursuant to Section 347 of the Companies Act 2016 to initiate derivative actions. Additionally, they are seeking a stay of proceedings pending the disposal of this application. [3] This action, in suit AA-22NCvC-58-07/2023, is heard together with 55 suit no. AA-22NCvC-59-07/2023, where the parties are the same and the solicitors for all the respective parties have agreed the decision and the grounds of judgment given herein shall be applicable to the similar application in suit no. AA-22NCvC-59- 07/2023. 60 Background facts [4] The Plaintiff, a director and shareholder of Toong Yuen (Ipoh) Sdn Bhd, Toong Yuen has filed an action against various Defendants. The Plaintiff alleges that the 65 Defendants, who were appointed as directors of Toong Yuen, were appointed illegally. According to Toong Yuen's Memorandum and Articles of Association, the maximum number of directors is (7) seven, and there has been no special resolution to amend this. However, an Ordinary Resolution was passed to increase the 70 number of directors from (7) seven to (11) eleven, which the Plaintiff claims is ultra virus of the Memorandum and Articles of Association of Toong Yuen and vis-à-vis the Companies Act 2016. Further, the Plaintiff contends that two new directors were appointed on 23 June 2023, but their appointment was not registered with the Companies 75 Commission of Malaysia. [5] The Plaintiff seeks various remedies, including a declaration that the appointment of the 1st to 4th Defendants as directors is null and void, an injunction to restrain them from acting as Directors, and 80 rectification of the Register of Directors. Further, the Plaintiff seeks a declaration regarding the maximum number of directors and the validity of the appointment of the two new directors, along with damages. Determination of the Issues 85 [6] Having gone through the submission of the 1st, 2nd, 3rd, 4th, 6th, , I must at the outset state that I am in agreement with the submission of the Defendants on the issues discussed hereinafter. Whether the Writ and consequently the suit ought to be struck out in 90 absence of indorsement on the Writ [7] The Writ was filed without a statement of claim and lacked a general endorsement, as required by Order 6 Rule 2(1)(a) of Rules of Court 2012 ( ROC ), page 3 of the Writ only had a heading 95 'Pengindorsan' without any cause of action or relief claimed. [8] Order 6 Rule 2(1)(a) of ROC mandates that a Writ should be endorsed with a statement of claim or, if not, with a concise statement of the nature of the claim or relief required. This rule 100 should be read in conjunction with Order 18 Rule 1, which allows the statement of claim to be served when the writ is served or within 14 days after the defendant enters an appearance. Order 6 Rule 2(1)(a) of ROC Before a Writ is issued, it shall be endorsed with a statement of 105 claim which shall comply with the requirements of Order 18, or, if the statement of claim is not endorsed on the writ, with a concise statement of the nature of the claim made or the relief or remedy required in the action begun thereby. 110 Order 18 Rule 1 of ROC Unless the Court gives leave to the contrary or a statement of claim is endorsed on the writ, the plaintiff shall serve a statement of claim on the defendant or, if there are two or more defendants, on each defendant, and shall do so either when the writ is served 115 on that defendant or at any time after service of the writ but before the expiration of fourteen days after that defendant enters an appearance. [9] The Plaintiff filed the Statement of Claim after the Defendants had 120 entered their appearance, and at that time, there was no cause of action endorsed on the Writ. [10] The current rules i.e. ROC 2012 as opposed to Rules of the High Court 1980, do not provide for conditional appearance by the 125 Defendants, and entering appearance is not considered a waiver of defects in the Writ. Order 12 Rule 9 of ROC makes it clear that the appearance of a defendant does not waive any irregularity in the writ or its service. 130 Order 12 Rule 9 of ROC The appearance by a defendant in an action shall not be treated as a waiver by him of any irregularity in the writ or service thereof or in any order giving leave to serve a notice of the writ out of the jurisdiction or extending the validity of the writ for the purpose of 135 service [11] In Teow Chuan & Anor v YAM Tunku Nadzaruddin Ibni Tuanku Jaafar & 4 Ors [1999] 7 CLJ 195, it was discussed of the requirement of endorsing a writ with a statement of claim or a 140 concise statement of the nature of the claim. It states that the purpose of this endorsement is to inform the defendants of the nature of the suit and the reasons for legal actions. The case suggests that a concise statement of the nature of the claim or relief required in the action to be in compliance with Order 6 Rule 2(1)(a). 145 [12] In Duli Yang Amat Mulia Tunku Ibrahim Ismail Ibni Sultan Iskandar Al-Haj Tunku Mahkota Johor v Datuk Captain Hamzah bin Mohd Noor and another appeal [2009] 4 MLJ 149, the Federal Court emphasizes the mandatory nature of compliance with rules 150 and discussed the difference between fundamental, mandatory rules and rules that may be subject to some flexibility. It suggests that technical non-compliance with mandatory rules cannot be cured and should not be overlooked. The then Chief Justice Zaki Azmi, delivering the judgment of the court said: 155 [35] Even if the word 'must' is to be construed as having the same effect as 'shall', nevertheless it still make compliance with the [46] The technical non-compliance of any rule may be remedied where there is an accidental omission or oversight by a party. A 160 general provision such as O 1A of the RHC is for the court or judge to give heed to justice over technical non-compliance. It must not supersede a mandatory requirement of the Rules. Order 1A cannot be invoked when a party intentionally disregards in complying with the Rules. Otherwise, parties would be 165 encouraged to ignore the Rules. Thus in this case, O 1A of the RHC does not apply as the respondents had intentionally disregarded O 6 r 7(2A) for their own reasons. [47] It is now necessary to determine the meaning of the phrase - 170 in identifying the breaches contemplated by the rule. Useful guidance is provided by the meaning of the phrase 'technical defect' considered in Gangadhar Dandawate v Premechand Kashyap AIR 1958 MP 182 where AH Khan J said at p 184: It is not always easy to define what the expression 'technical 175 defect' means. A technical defect in law is one which may come within the four corners of it, but it does not affect the merits of the case. It is a mistake which does not go to the core of the matter. Their Lordships of the Supreme Court in Pratap Singh v Shrikrishna Gupta AIR 1956 SC 140 (C), have observed: 180 that the tendency of the courts towards technicality is to be deprecated, that it is the substance that counts and must take precedence over mere form. Some rules are vital and go to the root of the matter: they cannot be broken; others are only directory and a breach of them can be overlooked provided there is 185 substantial compliance with the rules read as whole and provided no prejudice ensues; and when the legislature does not itself state which is which, judges must determine the matter, and, exercising a nice discrimination, sort out one class from the other along broad based, common sense lines. This principle was enunciated by 190 Viscount Maugham in Punjab Co-operative Bank Ltd, Amritsar v Income-tax Officer, Lahore AIR 1940 PC 230 (D). [48] In the context of the Rules of the High Court 1980 the phrase - - compliance with a rule which is not fundamental or mandatory in 195 nature. [49] The Malaysian Court Practice 2007 Desk Edition lists at p 9, a failure to renew a writ for service as a breach of a fundamental kind. The answer to the first question also shows that O 6 r 7(2A) of the RHC which deals with the service of a writ is mandatory. It 200 follows that O 1A of the RHC cannot be invoked to cure the failure to comply with the prerequisites O 6 r 7(2A) of the RHC. [50] As I had mentioned in court, if O 1A is sought to be invoked whenever a party fails to comply with any provision of the rules, then the whole of the Rules of the High Court 1980 would be 205 rendered useless. For example, can failure to enter appearance or file defence within the specified period be considered as an irregularity? Of course it cannot be. A party who is late in filing the relevant papers must obtain an order from the court to extend the time, if such extension is required and is permitted by the RHC. 210 Therefore, the answer to question two is in the negative. [13] In Soda KL Plaza Sdn Bhd v Noble Circle (M) Sdn Bhd [2002] 2 MLJ 367, the court upon reviewing a number of cases highlight that a consistent interpretation of the word 'shall or 'must' in the Rules 215 of the High Court 1980 as indicating mandatory provisions that must be strictly complied with. It states that breaches of such provisions cannot be cured, as there is no room for discretion in such cases. 220 [14] In conclusion, the Plaintiff's Writ, filed without a statement of claim and lacking a general endorsement, stands in breach of Order 6 Rule 2(1)(a) of the Rules of Court 2012 (ROC), which necessitates either a statement of claim or a concise statement of the nature of the claim or relief required. The subsequent filing of the Statement 225 of Claim after the Defendants had entered their appearance did not rectify this fundamental irregularity. The strict and mandatory nature of compliance with ROC provisions has been affirmed by cases referred to above. These authorities also emphasize that breach of the mandatory rules cannot be cured or overlooked. Consequently, 230 the Plaintiff's Writ is rendered a nullity, and the Plaintiff's suit, as well as their Notice of Application for an interlocutory injunction, should be dismissed based on the absence of a valid cause of action. Whether the Writ is a nullity 235 [15] The Defendants contend that the Plaintiff's Writ, submitted on 20 July 2023, is fundamentally flawed and a nullity and accordingly urge the court to firstly, strike out the Writ; secondly, to dismiss the entirety of the Plaintiff's action, as it lacks a valid cause of action; and thirdly, to dismiss the Plaintiff's Notice of Application for an 240 interlocutory injunction. Their central assertion revolves around the necessity of a pre-existing cause of action for an interlocutory injunction, a requirement that remains unmet due to the nullity of the Plaintiff's Writ. In support of their contention, the Defendants have sought reliance on a number of cases. 245 [16] In the case of Nishimatsu Construction Co Ltd v Kecom Sdn Bhd [2009] 2 MLJ 404, Gopal Sri Ram JCA cited Lord Diplock's statement in Siskina (Owners of Cargo Lately Laden on Board) and Others Respondents and Distos Compania Naviera S.A. 250 Appellants [1979] AC 210, emphasizing that the right to obtain an interlocutory injunction is contingent upon the existence of a cause of action pleaded in the usual manner. This was His Lordship Gopal [3] In our judgment the injunction applied for should 255 have not been granted because there was no pleading against the appellant on which the injunction could issue. It is settled law that the right to obtain an interlocutory injunction is not a cause of action. There must be a cause of action pleaded in the usual fashion 260 before an interlocutory injunction may be applied for and obtained. We consider it unnecessary to do more than refer to the following passage in the speech of Lord Diplock in the Siskina (Cargo Owners) v Distos Compania Naviera SA [1979] AC 210 at p 256, : 265 right to obtain an interlocutory injunction is not a cause of action. It cannot stand on its own. It is dependent upon there being a pre-existing cause of action against the defendant arising out of an invasion, actual or threatened by him, of a legal or equitable right of the plaintiff for the 270 enforcement of which the defendant is amenable to the jurisdiction of the court. The right to obtain an interlocutory injunction is merely ancillary and incidental to the pre-existing cause of action. It is granted to preserve the status quo pending the ascertainment by the court of the rights of 275 the parties and the grant to the plaintiff of the relief to which his cause of action entitles him, which may or may not include a final injunction [17] While there have been recent reconsiderations and reservations 280 regarding the stringent principle outlined in Siskina (supra), as evidenced in cases like Kazakhstan Kagazy v Zhunus [2016] EWHC 1048 (Comm), exceptions have been established, especially concerning anti-suit injunctions, such as in Masri v Consolidated Contractors [2009] QB 503, it is important to note 285 that no such exception existed or was raised in the context of this suit or the related suit here. [18] It is a prerequisite that there must be a pre-existing cause of action to obtain an interlocutory injunction. This important condition, 290 however, remains unmet here owing to the nullity of the Plaintiff's Writ. As explained in Nishimatsu Construction Co Ltd (supra), the right to seek an interlocutory injunction is contingent upon the existence of a cause of action properly pleaded. Despite recent debates and exceptions no such exception was applicable or raised 295 in the context of the Suits here. Therefore, based on this premise and the nullity of the Plaintiff's Writ, it is imperative that the Plaintiff's Notice of Application for an interlocutory injunction be rejected. Whether the enforcement of Article 65 by personal or derivative action 300 [19] The Plaintiff, in his affidavit, identifies himself as a director and shareholder of the company, along with the 5th and 6th Defendants, who are also shareholders and directors. It remains unclear whether the Plaintiff is actively pursuing his rights as a shareholder against 305 the 5th and 6th Defendants. His primary contention revolves around these Defendants' alleged violation of Article 65 because of the unauthorized increase in the number of directors and by way of a circular resolution without his approval. Given that he is a minority shareholder, it appears that the Plaintiff has initiated this action on 310 behalf of the company to enforce Article 65 against the 5th and 6th Defendants, who collectively hold the majority of shares in the company. [20] This court is of the view that the enforcement of Article 65 serves 315 the general interests of the company and extends beyond personal interests, even though its effects may indirectly impact all individual members of the company. [21] The Plaintiff, a minority shareholder, lacks the authority to compel 320 the company's board to pursue legal action against the 5th and 6th Defendants, who possess the majority stake. The only recourse for the Plaintiff is to initiate a derivative action. However, prior to proceeding, the Plaintiff must obtain the court's permission to commence such action under Section 347 of the Companies Act 325

The new Companies Act 2016 has replaced the previous Sections 181A and 181B of the Companies Act 1965 with Sections 347 and 348, thereby abolishing the common law derivative action. 347 Companies Act 2016: Derivative proceedings 330

A complainant may, with the leave of the Court initiate, intervene in or defend a proceeding on behalf of the company.

Proceedings brought under this section shall be brought in the company's name.

The right of any person to bring, intervene in, defend or 335 discontinue any proceedings on behalf of a company at common law is abrogated. s. 348 Companies Act 2016: Leave of Court

An application for leave of the Court under section 347 shall 340 be made to the Court without the need for an appearance to be entered.

The complainant shall give thirty days' notice in writing to the directors of his intention to apply for the leave of Court under section 347.

Where leave has been granted for an application under section 347, the complainant shall initiate proceedings in Court within thirty days from the grant of leave.

In deciding whether or not the leave shall be granted, the Court shall take into account whether- 350

the complainant is acting in good faith; and

it appears prima facie to be in the best interest of the (underline is emphasised) 355 [22] His Lordship Gopal Sri Ram JCA in Abdul Rahim bin Aki (supra), and sustain an action under the exception to rule in Foss v Harbottle: 360 by courts of equity; by which the rule of judicial non-interference is overcome. It is based upon the premise that the company which has been wronged is unable to sue because the wrongdoers are themselves in control of its decision-making organs and will not, for that reason, permit an action to be brought in its name. In these 365 circumstances, a minority shareholder may bring an action on behalf of himself and all the other shareholders of the company, other than the defendants. The wrongdoers must be cited as defendants. So too must the company. The title to the action must reflect that the suit is being brought in a representative capacity. The statement of claim or 370 other pleading filed in support of the originating process must disclose that it is a derivative action and recite the facts that make it so. Further, there must be an express statement in the pleading that the action is being brought for the benefit of the company named as a defendant. An action that does not meet these requirements is 375 (underline is emphasised) [23] The Plaintiff's case necessitates the initiation of a derivative action under section 347 of the Companies Act 2016, primarily due to 380 the nature of the claim involving alleged violations of the company's Articles of Association, which pertains to corporate governance issues rather than personal shareholder rights, ensuring the company's interests are adequately safeguarded. To safeguard the interests of the company as a whole, it is necessary to obtain leave 385 from the Court for such an action and subsequently include the company as a Defendant to ensure comprehensive representation and protection of its rights. Breach of Article 65 is it personal wrong or corporate wrong 390 [24] When a corporate wrongdoing happens, the company should sue, and when a personal wrongdoing occurs, an individual should sue. However, in the context of corporate management, a wrongdoing can be seen as both personal and corporate. This leads to complexity, as it may be considered an exception to the rule in Foss 395 v Harbottle when a wrong affects both an individual member and the entire corporate entity, making the application of this principle more intricate. The author Margaret Chew in her book entitled Minority Shareholders' Rights And Remedies (Third Edition) (2017), states: 400 corporate wrong has occurred, the corporate entity is the proper plaintiff, and where a personal wrong has occurred, the person' is the proper plaintiff. It therefore follows that where a personal wrong occurs, a personal action is available and this falls outside 405 the scope of the rule in Foss v Harbottle, or at any rate, may be treated as an exception to the rule in Foss v Harbottle. However, in relation to a corporate enterprise and in the course of corporate management, a wrong done could be construed as a personal wrong toward a member, but in so far as the wrong affects all 410 members, it could also be construed as a corporate wrong. This is where the above proposition of startling simplicity begins to generate an inordinate amount of complexity. The constitution of a company is a contract between the members inter se and between the members and the company. Therefore, 415 a breach of the company's constitution may be considered an infringement of a personal right of the member to have the constitution observed. Nonetheless, in Mozley v Alston, blatant breaches of the articles of association by the directors were held by the Lord Chancellor, Lord Cottenham, to constitute a corporate 420 wrong. In dismissing the personal action brought by a shareholder complaining of the breaches, the Lord Chancellor stated: The complaint against the defendants is, that they are illegally exercising the powers of directors, and illegally retaining the seal and property of the company. That, if it be an injury at all, it is an 425 injury not to the plaintiffs personally, but to the corporation of which they are members--a usurpation of the office of directors, and, therefore, an invasion of the rights of the corporation." (underline is emphasised) 430 [25] The Plaintiff relies on Ling Beng Hui & Ors v Ling Beng Sung [1990] 2 MLJ 186, where it involves the rights to attend a meeting and vote, which was held to be personal right. This is what the court said: 435 Locus standi The plaintiffs, it would appear, are suing in their capacities as registered shareholders of the bank. According to Mr Wong, then the plaintiff will be caught by the rule in Foss v Harbottle (1843) 2 Hare 461. However, Mr Abraham submitted that the 'proper 440 plaintiff' aspect of the rule in Foss v Harbottle (1843) 2 Hare 461 does not apply where what is complained of is not a wrong to the company but an injury to the plaintiffs as members personally. If the plaintiffs' rights are infringed, they may sue in respect of those rights and the directors and majority members cannot stop 445 them (see Edwards v Halliwell [1950] 2 All ER 1064). The plaintiffs are alleging that their rights to attend and vote at a meeting and requisition an extraordinary general meeting or attend the annual general meeting are infringed by the injunction obtained by the defendant by virtue of his position and interests in Ming Yueh as 450 (underline are emphasised) [26] The learned judge in Ling Beng Hui (supra) in the later part of his judgment refers to a passage from 455 (5th Ed) and admits differentiating between personal and corporate rights is often a complex task, with the court leaning towards recognizing a provision in the memorandum or articles as conferring a personal right on a member if that member possesses a distinct, special interest in its enforcement, beyond the general interest that 460 every member shares in ensuring the company follows its constitution's terms. The passage states: hard to draw, and perhaps the most that can be said is that the court will incline to treat a provision in the memorandum or articles 465 as conferring a personal right on a member only if he has a special interest in its observance distinct from the general interest which every member has in the company adhering to the terms of its constitution. 470 [27] In Fong Poh Yoke & Ors v. The Central Construction Company (Malaysia) Sdn Bhd [1998] 4 CLJ SUPP 112 per Malik Ishak J, states: company's name himself, unless the board of directors ( Danish 475 Mercantile Co Ltd v. Beaumont [1951] Ch 680, [1951] 1 All ER 925 ), or the members by ordinary resolution ( Foss v. Harbottle [supra]; Pender v. Lushington [1877] 6 Ch. D 70; Marshall's Valve Gear Co Ltd v. Manning Wardle & Co Ltd[1909] 1 Ch 267 ), or the liquidator of the company if it is being wound up ( Alexander Ward 480 & Co Ltd v. Samyang Navigation Co Ltd [1975] 2 All ER 424, [1975] 1 WLR 673 ) authorise him to do so. In the event the individual member brings an action in the company's name without such authorisation, the defendant may have it struck out ( East Pant Du United Lead Mining Co Ltd v. Merryweather [1864] 2 Hem 485 & M 254 ). In exceptional cases, a member can sue to remedy a wrong done to his company but that member can always sue for wrongs done to himself in his capacity as a member ( Pender v. Lushington [supra]; and Edwards v. Halliwell [1950] 2 All ER 1064 ). The 490 individual rights of a member arise partly from the contract between the company and himself which must necessarily be implied on his becoming a member and partly from the general law. Under the contract implied from his membership, the member is entitled to have his name and shareholding entered on the 495 register of members and to prevent unauthorised additions or alterations being made to the entry ( Re British Sugar Refining Co [1857] 3 K & J 408 ) and to vote at meetings of members ( Pender v. Lushington [supra] ) and to receive dividends which have been duly declared or which have become due under the 500 terms of the articles ( Wood v. Odessa Waterworks Co [1889] 42 Ch. D 636 ) and to exercise pre-emption rights over other members' shares which are conferred by the articles ( Rayfield v. Hands [1960] Ch. 1, [1958] 2 All ER 194 ) and to have his capital returned in the proper order of priority in the winding up of the 505 company or on a duly authorised reduction of capital ( Griffiths v. Paget [1877] 5 Ch D 894). The member too has the right to transfer his shares ( Re Smith Knight & Co, Weston's case [1868] 4 Ch App 20 ) and not to have 510 his financial obligations to the company increased without his consent ( Hole v. Garnsey [1930] AC 472 ). But, no matter how wide these rights are vested to the members, a member is not vested with a personal right to have all the provisions of the Companies Act 1965 [Revised 1973] under his wing and, 515 consequently, a member cannot restrain directors from acting after their term of office fixed by the articles has expired ( Mozley v. Alston [1847] 1 Ph 790 ) nor can a member complain if meetings of members are irregularly convened or conducted ( Cotter v. National Union of Seamen[1929] 2 Ch 58 at 70; and Bentley- 520 Stevens v. Jones [1974] 2 All ER 653, [1974] 1 WLR 638 ), nor can a member complain if the chairman of the meeting wrongfully refuses to put a resolution to a poll ( MacDougall v. Gardiner [1875] 1 Ch D 13 ), and, lastly, nor can a member seek an order that errors or omissions in the company's annual 525 accounts should be corrected ( Devlin v. Slough Estates Ltd [1983] BCLC 497). At this juncture, reference to the decision of Gopal Sri Ram JCA in Abdul Rahim bin Aki v. Krubong Industrial Park (Melaka) Sdn Bhd & Ors [1995] 3 MLJ 417 CA is appropriate and there at p. 530 of the report his Lordship said: We begin with the rule in Foss v. Harbottle [1843] 67 ER 189. The rule has two limbs. The first limb of the rule - and the present appeal has nothing to do with its application - is that a court will not interfere with the internal workings of a corporation upon a 535 matter which is capable of being ratified by a majority of shareholders present and voting at a general meeting of the company. The content of the first limb, although it derives its name from the case just cited, in truth finds its origins in the earlier decision in Mozley v. Alston [1847] 41 ER 833. The modern 540 restatement of the rule is to be found in the judgment of Harman LJ in Bamford v. Bamford [1970] Ch 212; [1969] 1 ALL ER 969; [1969] 2 WLR 1107. The second limb of the rule is of much wider purport and is universal in its application. It is based upon the doctrine that only 545 he who has been injured may sue. Translated into company law, the proposition may be stated thus. If a wrong has been done to a company, then it is the company which is the proper plaintiff in an action brought to redress the injury. An individual shareholder or even a group of shareholders forming a minority on the floor of a 550 general meeting of the company have no locus standi to bring an action to remedy a wrong done to a company. See Prudential Assurance Co Ltd v. Newman Industries Ltd (No.2) [1982] Ch 204; [1982] 1 All ER 354; [1982] 2 WLR 31 (underline is emphasised) 555 [28] Shareholders may face constraints on their ability to recover losses, even for rights independent of the company's constitution, due to the "no-reflective loss" principle. This principle denies shareholder claims if their losses stem from circumstances that could also lead to a corporate claim against the same party, essentially reflecting 560 the company's loss. If a shareholder's loss relates to a reduction in their share value, it qualifies as reflective loss, as it would be remedied if the company's assets were restored through legal action. This concept was postulated in Prudential Assurance Co Ltd v Newman Industries Ltd (No 2) [1982] 1 Ch 204, 565 emphasizing that shareholders cannot recover damages solely because the company suffered damage; their loss is a reflection of the company's loss. This is what was said in the Prudential Assurance Co Ltd (supra) at page 222 - 223 as follows: In our judgment the personal claim is misconceived. It is of 570 course correct, as the judge found and Mr. Bartlett did not dispute, that he and Mr. Laughton, in advising the shareholders to support the resolution approving the agreement, owed the shareholders a duty to give such advice in good faith and not fraudulently. It is also correct that if 575 directors convene a meeting on the basis of a fraudulent circular, a shareholder will have a right of action to recover any loss which he has been personally caused in consequence of the fraudulent circular; this might include the expense of attending the meeting. But what he cannot do is to recover 580 damages merely because the company in which he is interested has suffered damage. He cannot recover a sum equal to the diminution in the market value of his shares, or equal to the likely diminution in dividend, because such a "loss" is merely a reflection of the loss suffered by the 585 company. The shareholder does not suffer any personal loss. His only "loss" is through the company, in the diminution in the value of the net assets of the company, in which he has (say) a 3 per cent. shareholding. The plaintiff's shares are merely a right of participation in the company on the terms of the articles 590 of association. The shares themselves. his right of participation, are not directly affected by the wrongdoing. The plaintiff still holds all the shares as his own absolutely unencumbered property. The deceit practised upon the plaintiff does not affect the shares; it merely enables the 595 defendant to rob the company. (underline is emphasised) Conclusion [29] In conclusion, I am of the view that the Plaintiff, in this case, is not 600 enforcing personal shareholder rights but is seeking to enforce Article 65 of Toong Yuen, which relates to the composition of the board of directors of the company, where the composition would have the overall effect on the decision making of the company, though the effect may extend beyond to effect individual member. 605 Therefore, the Plaintiff being a minority shareholder, is essentially bringing an action for the benefit of the company to enforce Article 65 against the 5th and 6th Defendants, who hold the majority of shares in the company. However, the Plaintiff has not obtained the necessary leave to commence a derivative action under section 610 347 of the Companies Act 2016 and as a result, the suit is an abuse of process. Therefore, I allow Enclosure 9 and dismiss Enclosure 2 in Suit 58, and similarly allow Enclosure 13 and dismiss Enclosure 2 in Suit 59, with total costs of RM15,000, subject to allocatur. 615 Date : 30th January 2024 Moses Susayan 620 MOSES SUSAYAN Judicial Commissioner High Court in Malaya at Ipoh, Perak 625 Parties: For Plaintiff : Robin Lim Advocates and Solicitors 630 [Messrs Chan & Associates] Ipoh, Perak For Defendant : Rabinder Singh 1, 2, 3, 4, 6 & 7 Advocates and Solicitors 635 [Messrs Rabin & Associates] Ipoh, Perak For Defendant 5: Surindar Singh Advocates and Solicitors 640 [Messrs Chong Surindar Su & Assoc.] Ipoh, Perak (Notice: This Grounds of Decision is subject to official editorial revision) Headnotes: 645 Civil Procedure Endorsement on Writ Order 6 Rule 2(1)(a) of ROC Whether the Writ of Summons is endorsed with a statement of claim or concise statement of the nature of the claim whether in the absence of an endorsement or concise statement it creates a reasonable cause of action and is liable to be struck out 650 Civil Procedure Pleadings Striking out statement of claim Rules of Court 2012 O 18 r 19(1)(a) and/or (d) where there is no reasonable cause of action by reason of no endorsement or concise statement on the Writ of Summons - Whether claim may be struck out and dismissed simultaneously under O 18 r 19(1) of the Rules of Court 2012 655 Companies and Corporations Company Law proper plaintiff Plaintiff must obtain the court's permission to commence derivative action under Section 347 of the Companies Act 2016.