Artisan Cuisine Sdn. Bhd. v 1. ) Ch'Ng Chin Keat (PA-22NCvC-46-03/2021)

CH’NG CHIN KEAT

2.

(201901046221)

CH’NG JING WEN (NRIC NO. 940113-07-5050) …DEFENDAN-DEFENDAN GROUND OF JUDGEMENT A. INTRODUCTION [1] This is the Plaintiff’s application under Enclosure 101 for leave to amend its Writ and Statement of Claim dated 9.3.2021, pursuant to Order 20 Rule 5(1), (2) and/or (5) of the Rules of Court 2012. According to the proposed amendments exhibited in Enclosure 101, 04/09/2025 10:42:28 PA-22NCvC-46-03/2021 Kand. 184 the Plaintiff now seeks to amend its Statement of Claim dated 9.3.2021, inter alia, in the following respects: – [a] To add the proposed 4th and 5th defendants who are the parents of the 1st and 3rd Defendants as the new defendants. [b] To plead that the Defendants (including the proposed 4th and 5th defendants) had established the 2nd Defendant through the 1st Defendant together with the 3rd Defendant to undertake the hostile takeover of the restaurant business of the Plaintiff. [c] To delete the original claim of RM3,167,699.35 and to add new claims for loss of costs (TNB bills) amounting to RM172,273.50, Legal Fees amounting to RM50,000.00, Loss of Business Opportunity or Profit amounting to RM36,000,000.00. [d] To plead that the proposed 4th and 5th defendants were the shadow or de facto directors in the Plaintiff and were in control of all the affairs of the Plaintiff and 2nd Defendant including orchestrated the alleged hostile takeover of the restaurant business of the Plaintiff and dissipated the Plaintiff’s assets. [e] To plead that the 1st and 3rd Defendants were only the frontman for the proposed 4th and 5th defendants in the Plaintiff and 2nd Defendant. [f] To plead cause of actions of breach of trust and unjust enrichment against the Defendants (including the proposed 4th and 5th defendants). B. FACTS OF THE CASE [2] The Plaintiff company was incorporated in 2018 by the 1st Defendant (“D1”), together with one Lim Lee Sheng (“Gary”) and one Leong Kar Chun (“Edwin”), for the purpose of operating a restaurant business under the name Artisan Cuisine Restaurant. The business was established on the strength of Gary’s reputation and goodwill, following his receipt of the International “God of Cookery” award in Hong Kong in 2017. [3] According to the Plaintiff, Gary and Edwin were initially involved in the active management of the company alongside D1. However, on or about 31.07.2019, Gary was removed from the active management of the Plaintiff company, followed shortly thereafter by Edwin. The Plaintiff alleges that these removals were the result of tactical manoeuvres orchestrated by the Defendants, thereby leaving D1 as the sole director in the active management of the Plaintiff company. [4] The Plaintiff further contends that, at all material times, Ch’ng Poh Chye, the proposed D4 functioned as the shadow director of the Plaintiff company (“P1”). Although D1, who is D4’s son, was formally named as the shareholder and director of the company, it is alleged that D1 invariably acted in accordance with D4’s instructions. The Plaintiff avers that D4 made all major decisions concerning the company and effectively presided over the directors’ meetings of P1. [5] The Plaintiff also asserts that the D2 subsequently incorporated a new company using the name of the 1st Defendant’s sister, D3, as the registered proprietor. It is the Plaintiff’s case that the Defendants, acting in concert, diverted the assets and profits of the Plaintiff company to the new entity, thereby misappropriating the Plaintiff’s property and business opportunities to the detriment of the company. [6] The Plaintiff had also filed a discovery application against the Defendants. Pursuant thereto, the limited documents disclosed by the Defendants revealed that D4, the father of D1 and D3, had invested in the 2nd Defendant company. According to the Plaintiff, this disclosure is evidence that D4 was the mastermind behind the use of his children, namely D1 and D3, as the registered proprietors of D2, with the objective of effecting a hostile takeover of the Plaintiff’s restaurant business. [7] In summary, the Plaintiff’s case is that the Defendants, acting together and under the direction of D4, orchestrated a scheme to exclude Gary and Edwin from the management of the Plaintiff company, to assume full control of its business, and to misappropriate its assets, profits and goodwill through the vehicle of D2. C. GROUNDS FOR THE AMENDMENT [8] The Plaintiff submits that the proposed amendments will not occasion any prejudice to the Defendants. On the contrary, the amendments are necessary in order to place before the Court all material facts and the parties involved in this civil suit. The amendments are primarily focused on matters arising from this Court’s earlier order allowing the Plaintiff’s application at Enclosure 35 to strike out the Defendants’ defence for failure to comply with the discovery order, and the subsequent decision of the Court of Appeal which restored the suit for trial. [9] The Plaintiff contends that the proposed amendments could not have been pleaded at the time of the filing of this suit, as the relevant facts only emerged after the discovery process, particularly upon the disclosure of the bank statement of D2. The Plaintiff asserts that it was only then discovered that D4, the father of D1 and D3, had also acted as a shadow director of D2. This new fact, the Plaintiff argues, demonstrates that D4 played a significant role in the alleged hostile takeover of the Plaintiff’s business by establishing the new company, Xi Lin Ge (D2), using the name of his daughter, D3, as the ostensible proprietor. The Plaintiff further maintains that there has been no undue delay, as the present application was filed promptly after the Court of Appeal remitted the matter for trial. [10] The Plaintiff stresses that the proposed amendments do not alter the character of the civil suit. Rather, they serve to disclose the complete factual matrix by identifying all the alleged wrongdoers, clarifying the current position of the subject matter, and refining the reliefs sought. In essence, the amendments are additions arising out of the discovery process and are intended to enhance the pleadings in order to assist the Court in adjudicating upon the real issues in controversy. D. OPPOSITION TO THE AMENDMENT [11] The Defendants, on the other hand, contend that the Plaintiff’s application for amendment has been brought in bad faith and/or with an ulterior motive, amounting to an impermissible attempt to have a “second bite at the cherry.” It is pointed out that the Plaintiff had previously commenced an identical action in the High Court of Malaya at Pulau Pinang vide Civil Suit No. PA-22NCVC-11-01/2023 (“the subsequent suit”) against the Defendants, including the proposed 4th and 5th Defendants. That suit was struck out by Justice Dato’ Quay Chew Soon. Although the Plaintiff has since filed an appeal to the Court of Appeal against the striking out order, the said appeal has yet to be heard and disposed of. The Defendants therefore submit that the proposed amendments are, in substance, a repetition of the subsequent suit, and that the Plaintiff is effectively seeking to revive a claim that has already been struck out by this Court, by way of amendment rather than through the proper appellate process. [12] The Defendants further argue that the Plaintiff had knowledge of the proposed 4th and 5th Defendants from the outset but made a conscious and deliberate election not to name them in the present suit at the earliest opportunity. Instead, the Plaintiff chose to commence the subsequent suit against the Defendants, including the proposed 4th and 5th Defendants, based on the same factual matrix. The Defendants contend that Enclosure 101 has only been filed as a reaction to the striking out of the subsequent suit, and is designed to “insure” against the Plaintiff’s own pending appeal to the Court of Appeal. [13] The Defendants submit that it would not be in the interest of justice to permit the Plaintiff to amend its Writ and Statement of Claim at this stage to add the proposed 4th and 5th Defendants and to substantially increase the quantum of the claim, particularly when there is already a pending appeal relating to the subsequent suit. The Defendants maintain that they, including the proposed 4th and 5th Defendants, would be gravely prejudiced should the amendment be allowed, and such prejudice cannot be adequately compensated by an award of costs E. ISSUES FOR DETERMINATION [14] Having considered the pleadings and the parties’ respective submissions, the issues that arise for determination in this application are as follows: [a] Whether the proposed amendments sought by the Plaintiff are bona fide and necessary for the purpose of determining the real questions in controversy between the parties; [b] Whether the Plaintiff has provided a satisfactory explanation for not raising the matters contained in the proposed amendments at an earlier stage of the proceedings; [c] Whether the proposed amendments, if allowed, would occasion prejudice or injustice to the Defendants which cannot be compensated by costs; and [d] Whether, in light of the subsequent suit which has been struck out and is now pending appeal before the Court of Appeal, the present application constitutes an abuse of the process of this Court. F. ANALYSIS AND FINDINGS [15] It is trite law under Order 20 rule 5 of the Rules of Court 2012 that the Court has a wide discretion to allow amendments to pleadings at any stage of the proceedings, provided that such amendments are made bona fide, are necessary for the purpose of determining the real issues in controversy, and do not occasion prejudice to the opposing party which cannot be compensated by costs. The Court must therefore assess the present application against these well-established principles by the Federal Court that has been explained in detail in Hong Leong Finance v Low Thiam Hoe and another appeal [2016] 1 MLJ 30 as follows: - [33] Having considered the facts and the circumstances of the present case, our views are as follows: - [a] when dealing with an application to amend the pleadings, which introduce a new case in the claim or defence, on the eve of the trial, the principles in Yamaha Motor are not the sole considerations; [b] the principles in Yamaha Motor applies to cases where the application to amend the pleadings is made at an early stage of the proceedings; [c] that there has to be a cogent and reasonable explanation in the applicant's affidavit as to why the application was filed late; [d] that the application to amend the pleadings is not a tactical manoeuvre; [e] that the proposed amendment must disclose full particulars for the court to ascertain if there is a real prospect of success in proving the same; [f] the lateness in the application to amend the pleadings cannot necessarily be compensated by payment of costs. Bona fides and necessity of the proposed amendments [16] On this issue, I accept that the Plaintiff’s proposed amendments are intended to introduce material facts arising out of the discovery process, in particular the bank statements of D2. It is only through these documents that the Plaintiff claims to have discovered the alleged involvement of the D4 in the management and direction of D2, as well as his role in the alleged hostile takeover of the Plaintiff’s business. On the face of it, such facts are relevant to the Plaintiff’s pleaded case and may assist the Court in determining the real questions in controversy. [17] The Defendants, however, maintain that the application is tainted with bad faith, as the Plaintiff had already commenced a subsequent suit against the same parties (including D4 and the proposed 5th Defendant) which was struck out. In their view, the present amendments are nothing more than an attempt to revive a claim which has already been dismissed. While I take note of this objection, I am also mindful that the fact of a subsequent suit does not automatically bar the Court from considering amendments in the present action, particularly if the amendments are based on facts that came to light only through discovery. Timing of the application [18] It is true that the Plaintiff had knowledge of D4 and his relationship with D1 and D3 from the outset. Nevertheless, the Plaintiff asserts that it only became aware of D4’s role as a shadow director of D2 after the disclosure of the relevant bank statements pursuant to the discovery order. The present application was filed promptly after the Court of Appeal restored this matter for trial. In the circumstances, I am not persuaded that there has been undue delay on the part of the Plaintiff in bringing the application. Prejudice to the Defendants [19] The next issue concerns prejudice. The Defendants argue that they, including the proposed 4th and 5th Defendants, would be gravely prejudiced if the amendments are allowed, as they would be compelled to re-litigate issues already disposed of in the subsequent suit. However, the law is clear that mere exposure to further litigation or inconvenience does not amount to legal prejudice, so long as such prejudice may be compensated by an award of costs or by granting appropriate procedural directions. In my considered view, this is not a case where the Defendants would suffer irremediable prejudice. On the contrary, they retain full opportunity to meet and rebut the Plaintiff’s allegations as set out in the proposed amendments during the trial. Abuse of process [20] Finally, the Defendants contend that the present application constitutes an abuse of process, given the existence of the subsequent suit which was struck out and is now pending appeal. While the overlap between the present amendments and the subsequent suit cannot be denied, it is important to note that the jurisdiction of this Court to allow amendments is not ousted merely because a separate proceeding had been struck out. The test remains whether the amendments are necessary for the determination of the real issues in this suit. In my assessment, the matters raised by the Plaintiff are directly connected to the subject matter of this action and are therefore not, per se, an abuse of process. [21] As for the reason above, I allow enclosure 101 with no order as to cost. Bertarikh 4 September 2025 SGD (Rozana binti Ali Yusoff) Hakim Mahkamah Tinggi Pulau Pinang Kompleks Mahkamah Pulau Pinang Pulau Pinang Peguam bagi pihak Plaintif : Martin Khoo Nurul Alia Afina binti Mohd Zaidi Tetuan Ismail Khoo & Assoc. Peguam bagi pihak Defendan: