All Kurma Sdn Bhd v Teo Heng Tatt (PA-22NCC-30-09/2021)

TEO HENG TATT (No. K/P: 781212-07-5333)

LIM KIN HOOU (No. K/P: 560111-02-5004)

TAN KIM CUN (No. K/P: 810829-07-5587)

YEAP SU CHENG (No. K/P: 800525-07-5474)

NAJIEB ARIFF BIN NAZIR ARIFF (No. K/P: 780503-07-5283)

FOO SOO KIM (No. K/P: 801112-07-5438)

LEADER FOOD SDN BHD (No. Syarikat: 202001020412 (1376732-W)

TAHA FOOD (M) SDN BHD (No. Syarikat: 201601012466 (1183397-W)

YEAP GIN KHOON (No. K/P: 830308-07-5483)

KHOR SYI KIAT (No. K/P: 840223-07-5053) …DEFENDAN-DEFENDAN GROUNDS OF JUDGMENT (Enclosure 311) INTRODUCTION [1] This is an application by the 7th Defendant (D7), Leader Food Sdn Bhd (Leader Food) under Order 15 Rule 6 and/or 20 Rule 5 of the Rules Of Court 2012 (ROC), to amend its Amended Defence dated 25.10.2023 to include a counter-claim against the Plaintiff, All Kurma Sdn Bhd (All Kurma) and two other individuals, Pamella Chiang and Yurisa Chiang who are directors and shareholders of All Kurma (Enclosure 311). D7 alleged tort of abuse of court process by the Plaintiff for filing this suit against D7 and that Pamella and Yurisa had misused the Mareva Injunction Order which was granted by this Court in favour of the Plaintiff. [2] It was noted that over the years, there were numerous interlocutory applications been filed under this Suit, heard by the two (2) previous predecessors, Justice George and Justice Kenneth, and this is the only one left now. BRIEF FACTS [3] The amendment sought by D7 in Enclosure 311 is on the basis that-i. The Plaintiff’s Amended Writ and Statement of Claim (Enclosure 255 and Enclosure 256) which was filed after the execution of an Anton Piller Order dated 8.10.2021; and Page 3 of 13 ii. Subsequent events following two (2) Mareva Injunctions obtained by the Plaintiff dated 8.10.2021 and 23.5.2023. D7’s Contention [4] D7 submits that the amendment sought in Enclosure 311 are bona fide arising from existing positions in their previous Amended Defence dated 25.10.2023. The proposed insertions of paragraphs 28 to 52 are to respond to All Kurma’s new allegations in the Amended Writ and Statement of Claim and to reflect new developments after the issuance of the Mareva Injunctions. [5] D7 contended that the amendment will not change the character of the Suit and referred the Court to the Court of Appeal case of Alloy Consolidated Sdn Bhd & Anor v Anjari Properties Sdn Bhd & Anor [2009] 4 MLJ 833 wherein the Court held that the counterclaim sought by the first respondent to insert into its defence was based on the same facts as those pleaded in the first respondent’s original statement of defence. [6] D7 further contended that the Plaintiff was granted an Anton Piller Order on 08.10.2021 and amended its pleadings to allege that D7 was incorporated by its former director, Teo Heng Tatt, who is the 1st Defendant, to compete with the Plaintiff while Teo was still a director, and that the Defendants had aided Teo in breach of his fiduciary duties. D7 was further accused of misusing confidential information to redirect suppliers and gain hidden profits. [7] D7 also contended that these allegations are unsubstantiated and based purely on assumptions and inferences. There is no pleaded act showing actual possession or receipt of confidential information. Page 4 of 13 Therefore, D7 seeks to introduce paragraphs 28–40 to respond to the allegations by All Kurma. [8] D7 also submitted that the COVID-19 pandemic had affected the market and profits, and any comparison of financial results for the years 2020–2021 is not accurate nor indicative of misconduct. D7 contended that Pamella and Yurisa, being directors and the directing mind and will of the Plaintiff, have acted in bad faith and with mala fide intent to stifle D7’s business growth through unfounded litigation. [9] As to the second ground, Leader Food contended that following the Amended Mareva Injunction dated 08.10.2021 and the Court of Appeal’s Mareva Injunction dated 23.05.2023, the Plaintiff, through Pamella and Yurisa, had misused the injunctions to intermeddle in D7’s day-to-day business operations. D7 alleged that the Plaintiff unreasonably rejected business invoices and withheld consent for payments necessary for operational expenses, causing financial loss and damage to its business. [10] D7 further submitted that the Federal Court in dismissing its leave to appeal against the Mareva Injuction, nevertheless allowed both parties to amend and/or vary the Mareva Orders. Plaintiff’s Contention [11] The Plaintiff in opposing Enclosure 311 submits that D7’s application is mala fide and an afterthought. It contended that the proposed counterclaim discloses no reasonable cause of action and contravenes the principle of separate legal entity. Further, the Court of Appeal’s Mareva Injunction Order was properly obtained and upheld by the Federal Court, and that D7’s allegation of abuse is unfounded. Page 5 of 13 [12] The Plaintiff further contended that the counterclaim improperly joins Pamella Chiang and Yurisa Chiang, without any pleaded basis to pierce the corporate veil. It is submitted that the Mareva Injunction was issued in favour of All Kurma, not its shareholders, and thus any allegation of abuse must be directed only against All Kurma. [13] The Plaintiff further contended that D7 had itself requested the Plaintiff’s assistance to facilitate utilisation of funds under the Mareva Order, even though such assistance was not required by the Order. The Plaintiff acted in good faith and at all times responded promptly to D7’s requests. [14] Accordingly, the Plaintiff submitted that D7’s solicitors had requested for the Plaintiff to facilitate the utilisation of D7’s funds. Although the Plaintiff agreed to D7’s request to facilitate the utilisation of D7’s funds, the Plaintiff’s solicitors had through their letters to D7’s solicitors reiterated that the Plaintiff’s approval is not required for D7 to use its assets as long as it is permitted under the Mareva Injunction Order. [15] The Plaintiff also contended that D7 filed its application to amend several months after the Plaintiff’s Amended Statement of Claim was filed and after consent orders had been recorded, showing an undue delay and an afterthought. It is contended that the application does not arise from the same subject matter but seeks to introduce a wholly new and unrelated claim. Page 6 of 13 Brief Background of the Mareva Injunction Order [16] The Plaintiff had applied for an Ex-Parte Mareva Order against D1 (Teo), D7 and Taha Food, the 8th Defendant (D8) which was granted by Justice George Varughese. However, on 27.6.2022, Justice Kenneth Yoong Ken Chinson St James, set aside the Ex-Parte Mareva Order and dismissed the Plaintiff’s inter-partes application for a Mareva injunction order against D1, D7 and D8 (High Court’s Decision). The Plaintiff then appealed against the High Court’s Decision to the Court of Appeal. [17] On 23.5.2023, the Court of Appeal allowed The Plaintiff’s appeal against the High Court’s Decision and ordered in brief as follows-

the upper limit of the Mareva Injunction Order against D7 and D8 was RM1,116.617.64, as originally prayed for by the

(b)

whether the application was bona fide; (2) whether prejudice caused to the other side could be compensated by costs and (3) whether the amendments would not in effect turn the suit from one character into another and inconsistent character. (para 4)”. Page 8 of 13 [22] It was the contention of the Plaintiff and this Court is inclined that D7’s amendment is not made bona fide and referred to the case of Fauziah Khanom bt Irshad Ali Khan v Pegawai Pejabat Pelajaran Daerah Johor Bahru & Ors [2013] 7 MLJ 737 on the definition of bona fide- “[34]…Bona fide is defined to mean ‘in good faith, honestly, without fraud, collusion or participation in wrongdoing’ (Osborn's Concise Law Dictionary (8th Ed), Sweet and Maxwell).” [23] Accordingly, an application to amend pleadings is not a matter of right of a party but is left to the judicial discretion of the Court depending on the circumstances of each case (See Raphael Pura v. Insas Bhd & Anor [2000] 4 CLJ 830; [2000] 1 MLRA 809; [2003] 1 MLJ 513 (CA)). [24] It is an established principle that the Courts have a wide discretion whether to allow an amendment or not (See Ismail bin Ibrahim v. Sum Poh Development Sdn Bhd & Anor [1988] 3 MLJ 348; [1988] 1 CLJ Rep 606; [1988] 1 MLRH 186). [25] On this point, this Court also observed that the Amended Defence was filed by D7 on 25.10.2023. Later, within two (2) months, D7 again filed this application of Enclosure 311 on 29.12.2023. The re-amendment of the Amended Defence to include counterclaim sought by D7 is essentially on the basis that Pamella and Yurisa, being the Directors of the Plaintiff, had misused/abused the Mareva Injunction Order causing D7 to lose its suppliers and customers. Page 9 of 13 [26] This Court finds that D7 should have considered the application sought in Enclosure 311 when it filed its Amended Defence on 25.10.2023 but instead waited for another two (2) months to again filed for a re-amendment and to include a counterclaim. This indicates an afterthought. [27] Additionally, in Public Bank Berhad v. National Feedlot Corporation Sdn Bhd & Ors & Another Appeal [2018] 1 LNS 966; [2018] 6 MLRA 495; [2018] AMEJ 0790; [2018] MLJ 938, the Court of Appeal held- “[15] What perhaps is of prime importance is for litigating parties to comprehend and accept that the conduct of litigation has changed substantially since 2009. The difference in approach is that where litigation was once conducted at the pace and manner dictated by advocates and solicitors, the emphasis has changed such that it is now the courts that steer the conduct of litigation so as to ensure a just, expeditious and economic disposal of matters. This means that time is not at large and costs are an important consideration while the primary goal of ensuring that justice is meted out is not compromised. [16] The goal of a just judgment or decision, coupled with an expeditious and economical disposal are not mutually exclusive. On the contrary, these objectives complement and serve each other well. This new approach is reflected in our Rules of Court 2012. Intrinsic to the scheme of how matters are conducted is the proper management of a case, as it greatly affects the progress of litigation generally. A failure to carry out a material step or inaction ought not to be condoned, and can of itself be penalized, even if it does not give rise to adverse consequences on the litigation itself.…”. [28] Moreover, in Hong Leong Finance Bhd v. Low Thiam Hoe & Another Appeal [2016] 3 MLRA 81; [2016] 1 MLJ 301; [2015] 8 CLJ 1, the Federal Court held that a different approach needs to be taken under the new case management regime to prevent delay in the progress of a case to trial and for its completion as “This is because an order for Page 10 of 13 compensation by payment of costs in such a case may not be an adequate remedy and it would also disrupt the administration of justice which affects the courts, the parties and the other users of the judicial process… The progress of the case is no longer left in the hands of the litigants but with the court in the driver's seat. (See the case of Syed Omar Syed Mohamed v. Perbadanan Nasional Bhd [2012] 9 CLJ 557)”. [29] This Court finds that Enclosure 311 essentially seeks to add new party, as an entirely new cause of action which would turn this suit from one character into a suit of another inconsistent character as the amendment changes the character of the pleadings (see Yamaha Motor (supra). [30] The contention of D7 is that the counterclaim is to take into account the new developments that have transpired as a result of the abuse of the Mareva Injunctions by the Plaintiff, Pamella and Yurisa, stating the instances of rejecting invoices without clear reasons, has caused significant disruption to D7’s business transactions. [31] Further, in its submissions, D7 stated “the proposed counterclaim is necessary for Leader Food to safeguard itself from losses caused by the abuse of the Mareva Injunction by All Kurma, Pamella and Yurisa.”. This Court is of the view that D7’s claim for abuse of the Mareva Order by the Plaintiff, and its two (2) directors, is not by putting this counterclaim. There are clear provisions for non-compliance of a court order. Also, if the court keeps on taking into account recent developments to be included in the pleadings, then, the pleadings would never be closed. Therefore, D7 cannot use this reason to resolve the issue of his alleged contention of abuse of the Mareva Order as D7 is not shut out from its opportunity at Page 11 of 13 receiving justice to resolve any issue of non-compliance of the Mareva Order. [32] D7 had referred to the case of Alloy Consolidate (supra), however, this Court finds that Alloy Consolidated (supra), can be distinguished with this Suit, as in Enclosure 311, D7 is seeking re-amendment of the Defence and citing the misuse of the Mareva Order in its counterclaim. [33] In addition, regarding the counterclaim against the two (2) directors, Pamella and Yurisa, reference is made to section 20 of the Companies Act 2016 that clearly established that companies “have separate legal identities from their shareholders and their directors” (see Lim Lip Eng v. Ong Ka Chuan [2022] 5 MLRA 208 (FC)). See also the classic case of Salomon v. A Salomon & Co Ltd [1897] AC 22 on the doctrine of separate legal personality which remains the cornerstone to protect individual corporate entities. In the Court of Appeal case of Hubline Berhad & Another Appeal v. Intan Wazlin Ab Wahab & Ors And Another Appeal [2026] 1 MLRA 572, it was held that “The separate legal personality principle is trite. Once a company is incorporated, it becomes its own legal person distinct from its shareholders, directors, or parent and subsidiary entities.” [34] Provision on separate legal entity in section 20 of the Companies Act 2016 was incorporated as a new provision when the Companies Act 1965 was revamped and repealed. It provides- “20. Separate legal entity. A company incorporated under this act is a body corporate and shall:

have legal personality separate from that of its members; and

continue in existence until it is removed from the register.” Page 12 of 13 [35] Likewise, in the case cited by the Plaintiff of Ong Leong Chiou & Anor v Keller (M) Sdn Bhd & Ors [2021] 3 MLJ 622, the Federal Court held- “(d) if the wrongdoing warrants the application of the evasion principle, the consequence is that the corporate veil is pierced, so as to enable liability to (be) imposed on a person, seemingly unconnected to the transaction in dispute. First, it is necessary to ascertain if there is legal right against the person in control of a company which exists independently of the company’s involvement, and a company is interposed such that the legal personality of the company defeats the legal right or frustrates its enforcement. This is a considerable obstacle to overcome, and it is only rarely that an appropriate set of facts will allow for such ‘piercing’. Ultimately the narrow and rigid test ensures that the corporate personality is not lightly disregarded.” [36] Summarily, this Court is of the view that the doctrine of separate legal entity applies, and that Enclosure 311 is an afterthought in order to reinvent D7’s application to vary the Mareva Injunction Order. Furthermore, there is an undue delay in applying for the amendment after the Plaintiff’s Amended Statement of Claim which was filed on 28.8.2023