Looh Ah Chuang @ Loh Boo Chuan v Soo Ker Sik (P-02(NCC)(A)-1237-06/2018)

(a) a declaration that the $ 5^{th} $ defendant had conducted the affairs of $ 1^{st} $ defendant in a manner that is oppressive and/or unfairly prejudicing the interests of the plaintiff throughout the period between 4/12/2012 until 22/12/2016;

(b) a declaration that the $ 5^{th} $ defendant breached his fiduciary duties towards the $ 1^{st} $ defendant and the plaintiff throughout the period between 4/12/2012 until 22/12/2016;

(c) the $ 5^{\mathrm{th}} $ defendant jointly with $ 2^{\mathrm{nd}} $ and $ 3^{\mathrm{rd}} $ defendants do pay the auditor fees to carry out detailed and comprehensive audit exercise for the period between 2011 until to date; and

(d) a mandatory injunction for the $ 5^{1 \mathrm{h}} $ and $ 6^{1 \mathrm{th}} $ defendants to deposit with the $ 1^{1 \mathrm{st}} $ defendant all benefits received under the agreement dated 9/4/2010 made between the $ 6^{1 \mathrm{th}} $ defendant and $ 1^{1 \mathrm{st}} $ defendant as at the date of the order. The Instant Appeal [14] Before us, the decision of the High Court was assailed on a number of grounds. The first ground of attack was that the Originating Summons ("OS") of the plaintiff did not disclose any cause of action. It was submitted that under Order 7 r 3(1) of the Rules of Court 2012 ("ROC 2012"), it is mandatory for the plaintiff to provide a statement to identify the cause of action in respect of the claims and not by stating only the reliefs sought. [15] In this context, reference was made to this Court's decision in Saraswathy Devi Nadchatiram v Vijayalakshmi Devi Nadchatiram [1998] 1 CLJ 1035 ("Saraswathy") where it was adjudged (per NH Chan JCA) at p. 1042: "So that an originating summons is just like a pleading in a statement of claim, it must contain a concise statement of the relief or remedy claimed with sufficient particulars to identify the cause of action in respect of which the relief or remedy is claimed. In other words, an originating summons, like a statement of claim, must disclose a cause of action. Therefore, if the summons itself, as in the instant case, does not disclose any cause of action, it can be dismissed." [16] As the OS in the instant case did not disclose any particulars as to the cause of action but only contained mere reliefs without any background, it was submitted that on this ground alone the OS should have been dismissed. [17] In our respectful view, this ground of attack was without merit. Order 7 r 3(1) ROC 2012 provides that the originating summons must state in concise fashion the relief or remedy claimed together with sufficient particulars to identify the cause or causes of action. In our assessment, these requirements were sufficiently met in the present case. Unlike the Saraswathy case, the OS here contained the heading "Dalam perkara mengenai Seksyen 346 Akta Syarikat 2016". It was plain that the plaintiff was mounting an oppression claim as envisaged under s. 346 of the Companies Act 2016 ("CA 2016"). There was no other type of claim under the said provision. [18] It is true that relief under s. 346 of CA 2016 can be granted on various grounds as stated but it would be sufficient, in our view, for the full particulars to be provided in the affidavits accompanying the OS. To our understanding, no prejudice was caused as all parties were fully aware of what the allegations were and what was being sought. [19] In this respect, the Singapore Court of Appeal was faced with a similar issue in Kitnasamy s/o Marudapan v Nagatheran s/o Manogar and another [2000] 1 SLR(R) 542. The Court there decided that the originating summons in that case had complied with O 7 r 3 of the Rules of Court (Singapore) (which provision was essentially similar to ours) as there had been a reference in the heading to s. 216 of the Singapore Companies Act (Cap 50) which was equivalent to s. 346 of the CA 2016. For similar reasons, we did not think the appellants here could succeed on this point. [20] The next challenge was on the ground of delay. It was asserted that seven years had passed after the 2010 Agreement had been entered before the instant action was brought. It was contended that the plaintiff had full knowledge of the 2010 Agreement and there had been no complaint from him all this while. [21] In support, it was contended that because of the delay the plaintiff should be deemed to have acquiesced in the conduct complained of. In this context, the plaintiff relied on the case of Re Senson Auto Supplies Sdn Bhd [1988] 1 MLJ 326 where Edgar Joseph Jr (as he then was) observed (at p. 332): "Secondly, I noted that the major matters complained about by the petitioners appear to have been spread out over a considerable period of time. It is settled law that delay by petitioners in initiating proceedings after they have realised that they have been victims of a scheme of oppression will induce the court to refuse relief, since this indicates that they have acquiesced in the conduct complained about and their complaints are not therefore made in good faith (see Re Jermyn Street Turkish Baths Ltd [1971] 3 All ER 184)." [22] The plaintiff, on the other hand, argued that he could not be faulted for the delay as he was only furnished with the relevant documents after numerous requests had gone unheeded. The plaintiff relied on the Federal Court decision in Rinota Construction Sdn Bhd v Mascon Rinota Sdn Bhd & Anor [2018] 1 MLJ 141 as authority for the proposition that mere delay without acquiescence is not a defence in equity. [23] On this score, although the arguments by the $ 5^{\mathrm{th}} $ and $ 6^{\mathrm{th}} $ defendants seemed compelling, we considered that there was no positive conduct by the plaintiff which indicated that there had been a waiver or acquiescence by him. In fact, he had been consistent in seeking for documents for a period of time which indicated to us that although there was delay, there was indeed no acquiescence by him. For these reasons, we were not persuaded on the delay point. [24] The final ground of challenge was what we considered to be the meat of the matter. The $ 5^{\mathrm{th}} $ defendant submitted that the learned Judge had come to an erroneous finding that the $ 5^{\mathrm{th}} $ defendant had breached his fiduciary duties to the company and that such conduct amounted to oppression against the minority shareholders. [25] At the heart of the allegations, and which greatly influenced the learned Judge, was that the 2010 Agreement was dubious and a sham. In this particular context, it must be noted at the outset that the 2010 Agreement was actually an agreement to repay a sum that was already agreed as outstanding. In other words, it was not an agreement for the purchase of materials but rather a mechanism as to how the debt of RM595,000.00 was to be repaid. The materials would have been supplied much earlier. [26] It is also significant that when the 2010 Agreement was signed, the $ ^{5} $ th defendant was not a director of the company. He only became a director two years later. It was actually the plaintiff who was the director of the company when the 2010 Agreement was signed. The plaintiff was even a signatory to the 2010 Agreement on behalf of the company and for good measure agreed to stand as guarantor for the debt up to the sum of RM595,000.00. [27] Now, although the plaintiff may claim that he had not seen any invoices in relation to the debt, it is at least curious as to why he would be signing a guarantee for not an inconsiderable sum of money which the company itself had agreed that it owed to the $ ^{6} $ th defendant. The plaintiff was no country bumpkin. By his own admission he was an experienced businessman who would not willy-nilly sign a letter of guarantee for what he claimed seven years later to be for a dubious agreement. [28] Now, the learned Judge, with respect, failed to take into account all these pertinent facts in arriving at her conclusion. If indeed it was a moneylending transaction, then surely the plaintiff would have been complicit in the whole arrangement. It would be quite a stretch to believe that he was being oppressed or that his interest was being disregarded, or that he was being unfairly discriminated or that he was prejudiced as required under s. 346 CA 2016. It would be quite bizarre to think that the plaintiff was the author of his own oppression. [29] In any case, if this action was in essence an attempt to recover monies wrongly taken out from the company, it would have been more appropriate for any aggrieved party to have initiated a derivative action. We note, as held in Lowe v Fahey and others [1996] 1 BCLC 262 ("Fahey"), that s. 346 of CA 2016 confers a very wide jurisdiction since the provision allows the court to "make any such order as the Court thinks fit". This would include, for example, where unfairly prejudicial conduct involves the diversion of company funds (Fahey, at p. 268) (see also Re a company [1986] BCLC 68). However, we did not think the instant action was one where such an order could be made. [30] In our view, the present action, in relation to the $ 5^{\mathrm{th}} $ and $ 6^{\mathrm{th}} $ defendants, was in effect a backdoor attempt to void a contract which may in fact be time-barred under the Limitation Act 1953. It was compounded by the reference and reliance by the learned Judge to highly disputed facts. [31] It is settled law that when evidence is presented through affidavits and there are disputed facts presented to the court, then in the absence of an application to cross-examine the deponents, the court should confine itself and decide on the undisputed facts. This principle was reiterated by the Federal Court in Serac Asia Sdn Bhd v Sepakat Insurance Brokers Sdn Bhd [2013] 5 MLJ 1 where in speaking for the Court, Abdull Hamid Embong FCJ stated at p.17: "[40] Faced with these credible counter allegations as found in the appellant's opposing affidavit, and in the absence of a viva voce enquiry on those disputed facts, the courts below should have ignored those disputed deposition of facts forming the basis of the alleged fraud. The courts in such a situation should only confine themselves and decide the outcome of the case by considering only the incontrovertible facts. In Tay Bok Choon v Tahansan Sdn Bhd [1987] 1 MLJ 433. a case involving a petition for the winding up of a company, with both sides presenting contradicting affidavits, the Privy Council in their advice stated that: [32] We would go further to state that when faced with such credible contradictory allegations in the affidavits, the learned Judge ought to have suggested to the parties to have the deponents cross-examined on their allegations. With the cross-examination of the deponents, the court would be in a better position to evaluate the competing assertions. In a suitable case, the court could also convert the originating summons to a writ action. Indeed, considering the allegations and the relief being sought, this would have been an appropriate course of action in the present action given the circumstances. By deciding on disputed facts in the affidavits and without assigning any reasons for doing so, we were constrained to hold that the learned Judge was plainly wrong not only in the approach adopted but also the outcome. [33] In this respect, we noted that the allegations against the $ 5^{\mathrm{th}} $ and $ 6^{\mathrm{th}} $ defendants were refuted credibly with contemporaneous documents. There were a whole host of purchase orders, delivery orders and invoices annexed to the affidavits which could not simply be brushed aside without comment. If indeed they were all contrived, as the learned Judge appeared to accept, and that this was a money-lending transaction, it does not explain why payments under the said agreement were only made more than two years later. There was certainly more to this than meets the eye and hence the imperative for a viva voce enquiry before any conclusions could be made. [34] As noted earlier, the change of cheque signatories to operate the company's account was done with the approval of the board of directors including the plaintiff. The $ 5^{\mathrm{th}} $ defendant became a director and shareholder of the company with the sanction of the board of directors including the plaintiff. There was certainly no irrefutable evidence to show that the 2010 Agreement was not a genuine arms-length transaction especially in the face of the contemporaneous documents as alluded to earlier. [35] In regard to the other allegations of breach of fiduciary duty by the $ ^{5} $ th defendant, he had denied signing the cheques and had averred that he was not involved in the operations and management of the company. At best, what was adduced were documents showing that the $ ^{5} $ th defendant together with the $ ^{3} $ rd defendant had requested for payment from one account to another account of the company. Again, since the allegations were credibly disputed, it was not open to the learned Judge to make the findings as she did without the benefit of cross-examination of the deponents. Conclusion [36] In the circumstances, and for the reasons we have provided, there were merits in the appeal. Accordingly, the appeal was allowed and the order of the High Court in relation to the $ 5^{th} $ and $ 6^{th} $ defendants in paragraphs 2,4,7,10 and 17 of the amended OS was set aside. The plaintiff/ $ 1^{st} $ respondent was ordered to pay costs of RM20,000.00 here and below subject to allocator to the $ 5^{th} $ and $ 6^{th} $ defendants/appellants. Dated 30 October 2019 Signed (HARMINDAR SINGH DHALIWAL) Judge Court of Appeal Malaysia Counsel/Solicitors For the Appellants: Elson Beh (M/s Y.C. Wong) For the 1 $ ^{st} $ Respondent: Chong Tze Yan (with him Jonathan Toh) (M/s Khor, Ong & Co)