Alice A/P Sadayan v Chen Fock Cheong (BA-22NCvC-185-05/2024)

In Enclosure 13, the Plaintiff applied for discovery pursuant to Order 24 rules 3, 7, 9, 10, 11, 12, 13 and/or Order 92 rule 4 of the Rules of Court 2012 (ROC 2012) for the disclosure of various cheques purportedly related to a sum of RM1,700,000.00, which forms the subject matter of the Plaintiff’s claim against the Defendant. 17/07/2025 16:18:34

The Plaintiff’s cause of action was based on an alleged failure by the Defendant to pay RM1,700,000.00 in consideration for the transfer of 1,700,000 shares in KYE Heavy Machinery Sdn Bhd (KYE). The Defendant denied liability and argued that the said amount had already been paid into and invested in KYE at the request of the Plaintiff and/or one Ravindran a/l Arumugam (Ravi), both of whom were directors of KYE at the relevant time.

Having considered the affidavits, written submissions, and the applicable law, the Court finds no merit in the Plaintiff’s application. The Court’s reasons are set out below.

The Plaintiff initiated this suit against the Defendant to recover a sum of RM1,700,000.00, being the purchase price of ordinary shares in KYE. These shares were owned by the Plaintiff and sold to the Defendant.

The sale was made through a Form of Transfer of Securities dated 27 September 2019 (the Share Purchase Agreement). Under this agreement, the Defendant agreed and promised to pay the Plaintiff RM1,700,000.00 upon signing.

The Plaintiff alleged that the Defendant proceeded to transfer the shares to himself without paying the agreed sum. Despite numerous demands, the Defendant has not made any payment. Therefore, the Plaintiff has commenced this action to recover the sum owed.

In response, the Defendant denied the Plaintiff’s claim. He asserted that the RM1,700,000.00 had already been paid as an investment into KYE, and that this investment was intended to offset the purchase price of the shares. The Plaintiff disagreed and maintained that no payment was received, nor was there any agreement to set off the purchase price in this manner.

In summary, the Defendant’s defence is that:

He had invested RM1,700,000.00 into KYE, as stated in his Statement of Defence; and

The Plaintiff and/or Ravi allegedly agreed to treat this investment as payment for the shares, as pleaded in the Statement of Defence. The Plaintiff disputes this allegation.

Following this, the Plaintiff, through her solicitors, issued a Notice to Produce Documents dated 9 August 2024, requesting the Defendant to produce all documents proving that such an investment was made and that KYE received RM1,700,000.00 from the Defendant.

In reply, the Defendant produced KYE’s bank statements (Exhibit AS-2). However, the Plaintiff argued that these bank statements do not demonstrate that any such investment was made.

The Plaintiff argued that the bank statements show numerous withdrawals from KYE’s account, as seen at Exhibit CFC-7. This raises doubts about whether any genuine investment was made and whether KYE benefited from such payments.

The Plaintiff claimed that the Defendant, as the sole authorised signatory of KYE at that time, would have had full control over all transactions. Therefore, the transactions shown in KYE’s bank statements would have been carried out under his authority, not the Plaintiff’s. It is crucial to scrutinise the details of these transactions, including who received the funds and for what purpose, to challenge the Defendant’s claims of “investment” and “set-off”.

The Plaintiff further argued that if the payments were genuinely meant as an investment, the question still remains: Why were they withdrawn from KYE’s account? The burden is on the Defendant to prove who received the money and for what purpose.

Since the Defendant failed to provide complete and sufficient proof of investment, the Plaintiff sent another letter dated 3 October 2024 requesting further details and copies of the cheques mentioned in the bank statements. The Plaintiff contended that this was needed to confirm whether any genuine investment had been made and whether KYE had benefited from it.

The Plaintiff requested copies of the following cheques for verification:

Cash Cheque No.0606987 amounting RM250,000.00 for transaction on 19/01/2016

Cheque No.0652416 amounting RM11,472.00 for transaction on 05/07/2017

Cheque No.0652529 amounting RM11,472.00 for transaction on 05/07/2017

Cheque No.0652419 amounting RM11,515.00 for transaction on 05/07/2017

Cheque No.0652413 amounting RM18,097.00 for transaction on 05/07/2017

Cheque No.0652418 amounting RM22,229.00 for transaction on 05/07/2017

Cheque No.0652415 amounting RM27,164.00 for transaction on 05/07/2017

Cheque No.0652423 amounting RM10,902.00 for transaction on 06/07/2017

Cheque No.0655253 amounting RM21,200.00 for transaction on 06/07/2017

Cheque No.0652420 amounting RM22,971.00 for transaction on 06/07/2017

Cheque No.0655224 amounting RM23,289.24 for transaction on 06/07/2017

Cheque No.0655226 amounting RM200,000.00 for transaction on 06/07/2017

Cheque No.0655251 amounting RM500,000.00 for transaction on 06/07/2017

Cheque No.0655252 amounting RM500,000.00 for transaction on 06/07/2017

Cheque No.0637657 amounting RM24,617.68 for transaction on 10/07/2017

Cheque No.0655258 amounting RM40,468.45 for transaction on 14/07/2017

Cheque No.0655263 amounting RM60,552.50 for transaction on 14/07/2017

Cheque No.0647345 amounting RM73,153.30 for transaction on 14/07/2017

Cheque No.0655270 amounting RM98,188.00 for transaction on 14/07/2017

Cheque No.0655269 amounting RM158,183.63 for transaction on 14/07/2017

Cheque No.0652465 amounting RM18,868.00 for transaction on 17/07/2017

Cheque No.0655271 amounting RM26,328.37 for transaction on 17/07/2017

Cheque No.0652469 amounting RM52,797.96 for transaction on 17/07/2017

Cheque No.0655274 amounting RM84,233.13 for transaction on 17/07/2017 (collectively referred to as “the said Documents”)

On 10 October 2024, the Defendant responded, stating that he would not produce the requested documents, claiming they were irrelevant and unnecessary. The Plaintiff disagreed and argued that the documents are highly relevant. Since the Defendant has full control over these records and bears the burden of proving his alleged investment, his refusal to produce the documents is unreasonable. Therefore, the Plaintiff has filed this discovery application to compel the Defendant to produce them.

The law pertaining to the discovery of documents is provided under Order 24 of the ROC 2012. The Court’s discretion must be exercised judiciously and only when the documents sought are clearly relevant and necessary to the issues in dispute, and when the party from whom discovery is requested has possession, custody, or power over those documents.

The essential elements for an order for discovery were explained in the case of Yekambaran s/o Marimuthu v Malayawata Steel Berhad [1994] 2 CLJ 581, as follows: “The essential elements for an order for discovery are threefold; namely, first there must be a "document", secondly, the document must be "relevant" and thirdly, the document must be or have been in the "possession, custody or power" of the party against whom the order for discovery is sought. ...... As to "relevance", our Rules of the High Court limit discovery to documents which are "relevant to" or "relate" to the factual issues in dispute. More particularly, the discovery obligation applies to documents "relating to matters in question in the action" [Rules of the High Court, O. 24, r. 1(1)] or "relating to any matter in question in the cause or matter" [O. 24, r. 3(1)]. In practice, relevance is primarily determined by reference to the pleadings but there need not be a pleading for a matter to be said to be in issue. (See Phillips v. Phillips [1879] 40 LT 815, 821. In this context, relevance is defined broadly. It does not extend to documents relevant merely to a party's credibility unless that itself is a fact in issue. (See George Ballantine & Sons Ltd. v. Dixon & Son Ltd. [1974] 1 WLR 1125). If, however, the document's relevance is to a fact in issue, not simply to credibility, it has long been settled that relevance of an indirect kind suffices.” [emphasis added]

Therefore, the three elements required for an order for discovery are: a. There must be a "document"; b. The document must be "relevant"; and c. The document must be or have been in the "possession, custody or power" of the party against whom the order for discovery is sought.

Furthermore, the Court shall refuse the application for discovery if it is of the opinion that discovery is unnecessary either for disposing fairly of the cause or matter or for saving costs as provided under Order 24 rule 8 of the ROC 2012.

Having considered the written and oral submissions along with the documents provided by the parties, the Court finds that the said Documents sought by the Plaintiff are not clearly connected to the Plaintiff’s claim against the Defendant. Instead, the said Documents related to financial transactions involving KYE and third parties are not relevant to the core issue in this case. The Court notes that this request is inconsistent with the Defendant’s main defence, which is that the sum of RM1,700,000.00 has already been paid by the Defendant and invested into KYE.

In paragraph 10 of the Statement of Defence, the Defendant stated that the sum of RM1,700,000.00 was paid directly to KYE and had been received by the company. In paragraph 14, the Defendant further claimed that the Plaintiff and/or Ravi had agreed to transfer 1,700,000 shares to the Defendant as a set-off for that payment. In light of the said defence, this Court finds that the said Documents sought by the Plaintiff do not assist this Court in determining whether these statements are true.

First, the amounts stated in the said Documents exceed the RM1,700,000.00 being claimed. What matters in this case is whether that specific sum was paid. Looking into larger or unrelated payments does not address that question.

Second, the Defendant had already provided KYE’s bank statements, following the Plaintiff’s formal request, which displayed the payments the Defendant allegedly made. Whether those payments were made at the Plaintiff’s request is a matter that will be determined at trial. However, the additional documents now being requested are not relevant to that issue.

Third, the said Documents concern money that was later paid by KYE to other third parties. These payments do not establish whether the Defendant paid the purchase price or whether the Defendant’s set-off defence is valid. Therefore, the Court finds them to be irrelevant.

The law clearly states that for any request for disclosure of documents to be granted, the documents must be relevant. This principle was affirmed in the case of Yekambaran s/o Marimuthu v Malayawata Steel Berhad (supra).

This Court is satisfied that the Plaintiff failed to demonstrate how the requested documents were relevant to the issues in dispute. The documents neither support the Plaintiff’s case nor undermine the Defendant’s defence.

The Court agrees with the Defendant’s submission that the Plaintiff’s application is a fishing expedition. The documents are not directly relevant to any pleaded issue, nor do they significantly contribute to resolving the case.

Furthermore, the Court finds that the Plaintiff has failed to prove that the said Documents sought are in the possession, custody, or power of the Defendant. The said Documents belong to KYE, a separate legal entity that is not a party to this suit.

Order 24 rule 3 of the ROC 2012 clearly states that one of the main conditions for disclosure is that the documents must be in the possession, custody, or power of the party against whom the disclosure is sought. In this case, the Defendant contended that the documents in question were never in his possession but were held by KYE.

The Plaintiff’s claim in this case is specifically directed against the Defendant personally for allegedly failing or refusing to pay RM1,700,000.00 for the transfer of shares on or around 27 September 2019. The Defendant’s defence is that he had indeed paid RM1,700,000.00 into KYE as an investment, at the request of the Plaintiff and/or Ravi. Therefore, the documents requested, which concern KYE’s transactions with third parties, do not relate to the Plaintiff’s claim against the Defendant, and there is no evidence that the said Documents are in the Defendant’s possession, custody or power.

The Court also agrees with the Defendant’s submission that KYE is a separate legal entity from the Defendant. It is trite law that a company is a distinct legal person separate from its shareholders and directors.

This Court agrees that any documents held by KYE cannot be automatically attributed to the Defendant. KYE and the Defendant are legally separate entities, and at the relevant time, the Defendant was neither a director nor a shareholder of KYE. If the Plaintiff wishes to obtain those documents, the correct party to approach is KYE, not the Defendant.

Furthermore, it has also been observed that the Plaintiff and/or Ravi served as a director and shareholder of KYE during the relevant period in 2016 and 2017, which is the timeframe covered by the requested documents. Consequently, the Plaintiff would have had direct access to and control over KYE’s records at that time and should possess personal knowledge of KYE’s transactions, including payments made to third parties. Under section 245(4) of the Companies Act 2016, directors are legally entitled to inspect the company’s records at any time (see: Low Ean Nee v SNE Marketing Sdn Bhd [2024] 1 MLJ 447).

Moreover, this Court finds that the Plaintiff has failed to adequately prove that the documents sought from the Defendants are relevant and necessary for disposing fairly of the case or for saving costs.

Order 24 rule 13(1) of the ROC 2012 states: “An order for the production of any documents for inspection or to the Court shall not be made under any of the foregoing rules unless the Court is of the opinion that the order is necessary either for disposing fairly of the cause or matter or for saving costs.” [emphasis added]

In support of the above rule, the Court of Appeal in the case of Nguang Chan aka Nguang Chan Liquor Trader & Ors v Hai-O Enterprise Bhd & Ors [2009] 5 MLJ 40 interpreted the concept of "necessity" within Order 24 rule 13(1) of the ROC 2012 as follows: “Under r 13(1) an order for the production of documents for inspection is not to be made unless the court is of opinion that such order is necessary either for disposing fairly of the case or matter or for saving costs. It is for the party seeking production to satisfy the court that such production is necessary for the purpose specified in r 13(1) per Parker LJ in Dolling-Baker v Marrett & Ors [1991] 2 All ER 890 and Ventouris v Mountain [1991] 1 WLR

And in considering the application the court should bear in mind the words of Sir Thomas Bingham MR in Taylor v Anderton [1995] 1 WLR 447 at p 462 that 'the purpose of the rule is to ensure that one party does not enjoy an advantage or suffer an unfair disadvantage in the litigation as the result of a document not being produced for inspection.” [emphasis added]

Apart from merely asserting that the said Documents requested are relevant and necessary for a fair disposal of this suit or for saving costs, the Plaintiff has not sufficiently demonstrated how the said Documents are essential to achieving those objectives. In light of the Plaintiff’s pleaded case, which states that the Defendant failed to pay RM1,700,000.00 as consideration for the transfer of 1,700,000 shares in KYE, the Plaintiff has not provided this Court with a satisfactory explanation as to why the said Documents are necessary for a just and efficient resolution of the matter. While the Plaintiff contended that the said Documents are generally relevant to the issues raised in the claim, it is insufficient to rely solely on broad statements of relevance. The Plaintiff must go further and convincingly demonstrate to this Court that the said Documents are not only relevant but also necessary for the fair disposal of the suit or to reduce litigation costs. The Court is guided by Order 24 rule 8 of the ROC 2012, which allows it to refuse discovery if it is not satisfied that such discovery is necessary for either purpose. In this case, the Plaintiff has not discharged that burden, and the application for discovery is therefore liable to be refused.

This principle was elucidated in the Court of Appeal case of Malaysia Debt Ventures Berhad v Platinum Techsolve Sdn. Bhd. & Ors [2020] MLJU 1421, where S. Nantha Balan JCA explained that: [198] Further, it is also imperative for the respondents to establish that the DSA is necessary. Relevance cannot be conflated with necessary, as what is relevant may not be necessary. [199] In our view, the question as to whether the document for which disclosure is sought is necessary is an important and we might, add pivotal component for the order of discovery under Order 24 Rule 7 ROC. Indeed, Order 24 Rule 8 ROC also makes it imperative that the Court to refuse discovery if it is satisfied that discovery was not necessary. … [202] In our view, the proper approach to the question of whether discovery is “necessary” may be gleaned from the case of Bayerische Hypo-und Vereinsbank AG v Asia Pacific Breweries (Singapore) Pte Ltd and other applications [2004] SGHC 155; [2004] 4 SLR (R) 39 (“Bayerische”) where the High Court of Singapore at paragraph [37] stated as follows: “The ultimate test is whether discovery is necessary for disposing fairly of the proceedings or for saving costs. An assertion that the documents are relevant will not be good enough. Equally, an assertion that the documents are necessary because they are relevant will not be enough.” [203] Further, in paragraph [38] of the judgment, the Singapore High Court had considered Order 24 Rule 7 which is pari. materia with our Order 24 Rule 8 and stated that: “The court is, by O. 24 r. 7, concerned with the discretion to refuse disclosure of a document unless the necessity for disclosure is clearly demonstrated.” [emphasis added]

For the reasons above, the Court is not satisfied that the said Documents sought are relevant to the issues in dispute. Furthermore, the Plaintiff has not established that the documents are within the Defendant’s possession, custody, or power, and it is necessary for the fair disposal of this suit or for saving costs.

Accordingly, the Plaintiff’s application in Enclosure 13 is dismissed with costs of RM5000.00. Dated 17 July 2025 -sgd-JAMHIRAH ALI JUDGE HIGH COURT OF MALAYA SHAH ALAM SELANGOR DARUL EHSAN To the parties’ solicitors: For the Plaintiff : Nagarajan a/l Periasamy & Vinoshini a/p Narayanasamy (Messrs Nagarajan Peri & Co.) For the Defendant : Joyce Pang Tui Yi & Teoh Ting Wei (Messrs Teoh Chambers)