Blessed Life Plt v Enagic (Malaysia) Sdn Bhd (WA-24NCC-117-03/2021)

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DALAM MAHKAMAH TINGGI MALAYA DI KUALA LUMPUR (BAHAGIAN DAGANG) SAMAN PEMULA NO: WA-24NCC-117-03/2021 Dalam Perkara Mengenai Seksyen 25(2) Perenggan 14 Di Bawah

Schedule

Jadual Akta Mahkamah Kehakiman 1964 Dan Dalam Perkara Mengenai Aturan 24 Kaedah 7A Kaedah-Kaedah Mahkamah 2012 Dan Dalam Perkara Mengenai Aturan 7 Kaedah-Kaedah Mahkamah 2012 Dan Dalam Perkara Mengenai Aturan 92 Kaedah 4 Kaedah-Kaedah Mahkamah 2012 ANTARA BLESSED LIFE PLT (No. Pendaftaran: 201804001361 / LLP0015746-LGN) … PLAINTIF DAN ENAGIC (MALAYSIA) SDN BHD (No. Syarikat: 201101042983 / 971103-W) … DEFENDAN Page 2 of 32 JUDGMENT [1] This was an application by the Plaintiff via Originating Summons dated 15.3.2021 (Enclosure 1) for a pre-action discovery pursuant to, inter alia, Order 24 Rule 7A of the Rules of Court 2012 (“ROC”) (“this Application”). [2] The documents sought in this Application are substantially as follows: (i) Surat persetujuan, surat kebenaran dan/atau apa-apa dokumen lain yang telah diserahkan oleh Kenneth Lee An-Tzan (No. K/P: 68012410-5413) (“Kenneth Lee’’) untuk pertukaran hakmilik Akaun Pengedar No. 1058183 (“Akaun Pengedar tersebut”) yang dibuka dengan Defendan daripada K Mark Network PLT (No. Pendaftaran: 201804001663 / LLP0016045-LGN) (“K Mark Network’’) kepada Kenneth Lee dan tarikh pertukaran hakmilik tersebut; (ii) Jumlah Wang yang telah dibayar oleh Defendan kepada Kenneth Lee di bawah Akaun Pengedar tersebut bersama-sama dengan rekod-rekod dan/atau dokumen-dokumen sokongan berkenaan dengan pembayaran yang telah dibuat oleh Defendan kepada Kenneth Lee; (iii) Pengesahan Defendan sama ada Akaun Pengedar tersebut telah dibeku dan tiada apa-apa pembayaran dibuat kepada Kenneth Lee di bawah Akaun Pengedar tersebut selepas notis diberikan oleh pihak Plaintif kepada Defendan kira-kira pada bulan Ogos 2020 bahawa pertukaran hakmilik Akaun Pengedar tersebut adalah dibuat tanpa pengetahuan dan/atau persetujuan Plaintif.” (collectively “the Documents”) Page 3 of 32 A] BACKGROUND The Plaintiff’s Position [3] The facts averred by the Plaintiff leading to the filing of this Application are as below. [4] The Plaintiff a partner of a Limited Liability Partnership called K Mark Network PLT (Registration No.: 201804001663 / LLP0016045-LGN) (“K Mark Network”) which partnership has 3 partners who. The other two partners of K Mark Network are Samuel Sham Chee Leong (“Samuel Sham”) and Kenneth Lee An-Tzan (“Kenneth Lee”). Samuel Sham replaced another partner called Looi Eng Hock. [5] K Mark Network was established to manage and carry on the business of distributing and/or selling the Defendant’s products under Distributor Account No. 1058183 (“Distributorship Account”). [6] The Plaintiff claims that the ownership of the Distributorship Account was transferred by Kenneth Lee from himself to K Mark Network vide the “Distributor Information Change Form” dated 4.6.2018 in Exhibit “CCS-8” of the Plaintiff’s Affidavit In Reply (“the said Form”). [7] Since then, any bonuses, commissions and/or income generated by K Mark Network through the distribution and/or sale of the Defendant’s products under the Distributor Account were paid directly by the Defendant to K Mark Network by depositing the same into K Mark Network’s Bank Account. [8] In and/or around August 2020, the Plaintiff discovered from K Mark Network’s bank account statement for the month of July 2020 that no Page 4 of 32 payment was received by K Mark Network from the Defendant on the bonuses, commissions and/or income generated by K Mark Network under the Distributor Account. [9] Upon enquiries made with the Defendant, the Plaintiff was informed that the ownership of the Distributor Account had been transferred by the Defendant from K Mark Network to Kenneth Lee in and/or about May 2020 at the request of Kenneth Lee. [10] However, the Plaintiff was never informed of and/or has never consented to the transfer of ownership of the Distributor Account from K Mark Network to Kenneth Lee. [11] As such, the Plaintiff through Samuel Sham by way of email as well as meeting between the Plaintiff’s representatives, Samuel Sham and the Defendant’s representative, requested from the Defendant for the following: i) the information, records and/or documents in respect of the transfer of ownership of the Distributor Account from K Mark Network to Kenneth Lee; and ii) the ownership of the Distributor Account is to be returned and/or restored to K Mark Network. [12] The emails between the Plaintiff and the Defendant were between 21.9.2020 and 22.10.2020. [13] The Plaintiff claims that the Defendant had failed, neglected and/or refused to comply with the Plaintiff’s requests. Page 5 of 32 [14] Arising from the alleged change of the Distributorship Account from K Mark Network to Kenneth Lee in and/or about May 2020 which the Plaintiff averred was without its knowledge and/or consent the Plaintiff lodged a police report on 25.2.2021 (“Police Report”). In the Police Report, the Plaintiff stated, inter alia, that: i) Kenneth Lee had agreed via a partnership agreement dated 29.8.2018 (“Partnership Agreement dated 29.8.2018”) to assign (menyerahhak) the Distributorship Account to K Mark Network and all the operations of the Distributorship Account were to be managed and run by K Mark Network for the sale of the Defendant’s product. ii) around August 2020, the Plaintiff discovered that no payment was made into K Mark Network’s account. iii) after making enquiries with the Defendant, the Plaintiff was informed by the Defendant that Kenneth Lee had instructed the Defendant to pay the commission from the sales under the Distributorship Account to Kenneth Lee’s personal account, without the knowledge and agreement of the Plaintiff and the other partners of K Mark Network. The Defendant’s Position [15] Save for the facts stated in paragraphs 4 and 11 above which were admitted by the Defendant with the qualification that they are admitted insofar as they are consistent with the supporting documents exhibited by the Plaintiff, the other facts as stated by the Plaintiff were not Page 6 of 32 admitted. This is not necessarily because those facts presented by the Plaintiff are not true but primarily on the basis that the Defendant has no knowledge with regards to any internal arrangements and/or internal agreements between K Mark Network and the Plaintiff and/or with any other party and further that in any event it does not concern and/or relate to the Defendant. [16] The Defendant had averred at the outset that: i) The Distributorship Account was registered by one Lee Lip Beng and the ownership of the Distributor Account was subsequently transferred to his son, Kenneth Lee in 2015. This is not disputed by the Plaintiff. ii) Around the year 2018, the name of the Distributor Account was changed to one K Mark Network upon Kenneth Lee’s request. iii) There was never a change of ownership of the Distributor Account and at all material times, Kenneth Lee remained the registered principal owner of the Distributor Account. Being the registered principal owner of the Distributor Account and being an individual, Kenneth Lee is entitled to apply for any change of the Distributor Account. [17] The Plaintiff disputes paragraphs 16(ii) and (iii) above and claims there was a change of ownership based on the said Form and not just a change of name as alleged by the Defendant. [18] Regarding the request for information by the Plaintiff referred to in paragraph 11 above, the Defendant averred that as the Plaintiff was not at any time the principal account holder and/or owner of the Distributor Page 7 of 32 Account the Defendant was under no obligation to provide any documents and/or information to the Plaintiff. The Defendant received the emails from the Plaintiff’s representative and responded in good faith. B] THE LAW GOVERNING PRE-ACTION DISCOVERY [19] Paragraph 14 of the Schedule to the Court Judicature Act 1964 under section 25(2) provides as follows: “14. Discovery and interrogatories. Power to order discovery of facts or documents by any party or person in such manner as may be prescribed by rules of court.” (own emphasis added) [20] Under Order 24 Rule 7A ROC the Court is empowered to grant discovery before the commencement of proceedings or otherwise known as pre-action discovery: “Discovery against other person (O. 24 r. 7A) (1) An application for an order for the discovery of documents before the commencement of proceedings shall be made by originating summons and the person against whom the order is sought shall be made defendant to the originating summons. (2) An application after the commencement of proceedings for an order for the discovery of documents by a person who is not a party to the proceedings shall be made by a notice of application, which shall be served on that person personally and on every party to the proceedings. Page 8 of 32 (3) An originating summons under paragraph (1) or a notice of application under paragraph (2) shall be supported by an affidavit which shall :- (a) in the case of an originating summons under paragraph (1), state the grounds for the application, the material facts pertaining to the intended proceedings and whether the person against whom the order is sought is likely to be party to subsequent proceedings in Court; and (b) in any case, specify or describe the documents in respect of which the order is sought and show, if practicable by reference to any pleading served or intended to be served in the proceedings, that the documents are relevant to an issue arising or likely to arise out of the claim made or likely to be made in the proceedings or the identity of the likely parties to the proceedings, or both, and that the person against whom the order is sought is likely to have or have had them in his possession, custody or power. (4) A copy of the supporting affidavit shall be served with the originating summons or the notice of application on every person on whom the originating summons or the notice of application is required to be served. (5) An order for the discovery of documents before the commencement of proceedings or for the discovery of documents by a person who is not a party to the proceedings may be made by the Court for the purpose of or with a view to identifying possible parties to any proceedings in such circumstances where the Court thinks it just to make such an order, and on such terms as it thinks just. (6) An order for the discovery of documents may - (a) be made conditional on the applicant giving security for the costs of the person against whom it is made or on such other terms, if any, as the Court thinks just; and Page 9 of 32 (b) require the person against whom the order is made to make an affidavit stating whether the documents specified or described in the order are, or at any time have been, in his possession, custody or power and, if not then in his possession, custody or power, when he parted with them and what has become of them. (7) A person shall not be compelled by such an order to produce any document which he could not be compelled to produce - (a) in the case of an originating summons under paragraph (1), if the subsequent proceedings had already been commenced; or (b) in the case of a notice of application under paragraph (2), if he had been served with a subpoena to produce documents at the trial. (8) For the purposes of rules 10 and 11, an application for an order under this rule shall be treated as a cause or matter between the applicant and the person against whom the order is sought. (9) Unless the Court orders otherwise, where an application is made in accordance with this rule for an order, the person against whom the order is sought shall be entitled to his costs of the application, and of complying with any order made thereon on an indemnity basis.” (own emphases added) [21] Order 24 Rule 7A ROC must be read with Order 24 Rule 8 ROC which states as follows: “8 Discovery to be ordered only if necessary (O.24 r.8) On the hearing of an application for an order under rule 3, 7 or 7A, the Court, if satisfied that discovery is not necessary, or not necessary at that stage of the cause or matter, may dismiss or adjourn the application and shall in any case refuse to make such an order if and so far as it is of the opinion that Page 10 of 32 discovery is not necessary either for disposing fairly of the cause or matter or for saving costs.” (own emphases added) [22] A distinction ought to be made between discovery after the commencement of proceedings and before commencement of proceedings. Whilst the requirement of necessity is present in both discovery before and after commencement of proceedings, as can be seen from the above provisions of the ROC there are additional requirements regarding pre-action discovery. This will be dealt with in more detail later in this judgment when dealing with the merits of this Application. C] PLAINTIFF’S GROUND OF THIS APPLICATION [23] The Plaintiff essentially has one ground in support of this Application and that is the Documents are necessary to determine or formulate an intended cause of action and claim against Kenneth Lee whom the Plaintiff allege had changed the ownership of the Distributorship Account without the Plaintiff’s knowledge in breach of the Partnership Agreement dated 29.8.2018. This can be ascertained from, inter alia, the following averments in the Plaintiff’s Affidavit In Support and the Plaintiff’s Affidavit In Reply: Paragraph 6 and 7 of the Plaintiff’s Affidavit In Support 6. Saya sesungguhnya menyatakan bahawa dokumen-dokumen, rekod-rekod dan/atau pengesahan-pengesahan yang diminta oleh Plaintif adalah relevan, mustahak dan perlu untuk penentuan isu dan/atau isu-isu yang tertimbul dan/atau mungkin tertimbul di dalam suatu Page 11 of 32 prosiding yang diniatkan terhadap Kenneth Lee yang telah menukar hakmilik Akaun Pengedar tersebut tanpa pengetahuan dan/atau persetujuan Plaintif. 7. Justeru, saya telah dinasihati oleh Peguamcara Plaintif dan sesungguhnya menyatakan bahawa penzahiran dokumen sebelum permulaan prosiding adalah perlu kerana tanpa dokumen-dokumen, rekod-rekod dan/atau pengesahan-pengesahan yang diminta, Plaintif mempunyai kesusahan untuk menentukan berikutan bagi memulakan tindakan terhadap Kenneth Lee, antara lainnya (a) kausa tindakan Plaintif terhadap Kenneth Lee yang menukarkan hakmilik Akaun Pengedar tersebut tanpa pengetahuan dan/atau persetujuan Plaintif; (b) tuntutan Plaintif terhadap Kenneth Lee bagi jumlah wang yang telah dibayar oleh Defendan kepada Kenneth Lee selepas penukaran hakmilik Akaun Pengedar tersebut tanpa pengetahuan dan/atau persetujuan Plaintif; dan (c) keperluan Plaintif untuk mengambil tindakan-tindakan selanjutnya seperti permohonan injunksi dan/atau apa-apa relif terhadap Kenneth Lee dan/atau Defendan bagi memperhentikan pembayaran bonus, komisen dan/atau pendapatan yang tertimbul daripada pengedaran produk-produk Defendan di bawah Akaun Pengedar tersebut daripada Defendan kepada Kenneth Lee. Paragraph 14, 24, 27(b) and 28 of the Plaintiff’s Affidavit In Reply 14. Oleh itu, Plaintif mempunyai alasan yang kukuh untuk mendapatkan dokumen-dokumen bagi permohonan penukarmilikan hakmilik Akaun Pengedar tersebut daripada Defendan untuk menentukan kausa tindakan yang bakal diambil terhadap Kenneth Lee. Page 12 of 32 24. Saya sesungguhnya menafikan perenggan 19 dan perenggan 20 Afidavit Jawapan Defendan dan menyatakan bahawa tanpa dokumen-dokumen, rekod-rekod, maklumat-maklumat dan/atau pengesahan-pengesahan yang dipohon, Plaintif mempunyai kesusahan untuk menentukan kausa tindakan dan/atau kausa-kausa tindakan, isu dan/atau isu-isu serta tuntutan dan/atau tuntutan-tuntutan yang tertimbul dan/atau mungkin tertimbul yang di dalam suatu prosiding yang diniatkan kepada Kenneth Lee. 27. (b) Plaintif sememangnya memerlukan dokumen-dokumen, rekod-rekod dan/atau maklumat-maklumat yang dipohon sebelum permulaan prosiding terhadap Kenneth Lee apabila :- …..” 28.(d) Maka terdapatnya kebarangkalian wujudnya juga suatu kausa tindakan di bawah fitnah (‘defamation’) oleh Plaintif terhadap Kenneth Lee, yang mana sekali lagi membuktikan bahawa Plaintif mengalami kesusahan untuk menentukan isu dan/atau kausa tindakan yang tertimbul dan/atau mungkin tertimbul di dalam tindakan guaman Plaintif terhadap Kenneth Lee. (own emphases added) [24] In short, the Plaintiff’s requires the Documents for its intended action against Kenneth Lee and for the Plaintiff to formulate its case. [25] At this juncture, I must emphasise that the intended action is against Kenneth Lee and not the Defendant. Whilst the Defendant was mentioned in paragraph 7(c) of the Plaintiff’s Affidavit In Support, it is only on the basis of a possibility of obtaining an injunctive relief to prevent further payment of the bonus, commission and/or income arising from the distribution of the Defendant’s products under the Distributorship Account. The Defendant is therefore not the target of the intended action except arguably as a nominal defendant. Page 13 of 32 [26] On the issue that the intended action against the Kenneth Lee arises from a possible breach of contract, while the Plaintiff has not mentioned this specifically in the Plaintiff’s Affidavit In Support and Affidavit In Reply, however, the Plaintiff did raise this in the Police Report lodged by the Plaintiff. [27] Having determined that the Plaintiff’s intended action or claim is against Kenneth Lee I will now deal with the issue of whether the Documents are necessary to enable the Plaintiff to determine a cause of action against Kenneth Lee. D] WHETHER THE DOCUMENTS REQUESTED ARE NECESSARY TO DETERMINE THE CAUSE(S) OF ACTION [28] The purpose for which the Documents were requested was to essentially enable the Plaintiff to determine its possible cause or causes of action against Kenneth Lee. [29] However, from the Plaintiff’s conduct and averments it is apparent that the Plaintiff already has sufficient facts and documents to formulate a case against Kenneth Lee. This can be seen from, inter alia, the following: i) The Police Report lodged by the Plaintiff where the Plaintiff, inter alia, identified certain alleged wrongdoing committed by Kenneth Lee which includes breach of the Partnership Agreement dated 29.8.2018 as well as possible cause of action for the misappropriation of funds of the account of K Mark Network by Page 14 of 32 Kenneth Lee. This is evident from, inter alia, the following parts of the Police Report: “Blessed Life PLT dan seorang lagi yang dikenali Kenneth Lee An-Tzan (Kenneth) merupakan rakan-rakan kongsi bagi K Mark di mana Kenneth telah bersetuju dalam suatu perjanjian perkongsian bertarikh 29-8- 2018 untuk menyerahhak Distributor Account No. 1058183 (Distributor Account) kepada K-Mark dan segala operasi bagi Distributor Account adalah dikendalikan dan dijalani oleh K-Mark bagi jualan dan produk Enagic Malaysia (Enagic). Tiap-tiap bulan Enagic akan memasukkan wang komisyen jualan di bawah Distributor Account ke akaun K-Mark [514833414750] dan K-Mark akan membuat pembahagian menurut perjanjian perkongsian. Kira-kira dalam bulan Mei atau Jun 2020, saya mendapati bahawa tiada apa-apa wang dimasukkan ke dalam akaun K-Mark. Setelah membuat pertanyaan dengan Enagic, barulah saya dimaklumkan oleh Enagic bahwa bahawa Kenneth telah mengarahkan Enagic untuk memasukkan wang komisyen jualan di bawah Distributor Account ke dalam akaun peribadinya sendiri, tanpa pengetahuan dan persetujuan saya dan rakan-rakan kongsi yang lain. Sejak itu, K Mark dan/atau Blessed Life tidak lagi dapat membuat dan juga tidak menerima apa-apa pembahagian keuntungan menurut perjanjian perkongsian.” (own emphasis added) ii) Further, solicitors for the Plaintiff had written to the Defendant vide their letter dated 10.12.2020 where, inter alia, the allegations pointing to fraud, breach of contract and misappropriation of funds were raised against Kenneth Lee. Kenneth Lee is referred to as “KL” in the said letter, the relevant parts of which are as follows: “3. As you are aware, K Mark is a limited liability partnership consists of our client, Samuel Sham Chee Leong ("SS") and KL and any change of the ownership of the Distributor Account can only be effected by way of consent all the partners of K Mark. Page 15 of 32 4. In light of the fact that the ownership of the Distributor Account had been effected by you based on the submission and request made by KL alone without any knowledge or consent of the other partners of K Mark, our clients suspect that the written consent or letter of authorization or any supporting documents submitted by KL to you might be fraudulently obtained or the signatures therein might be forged. 5. Further, in light of the fact that the ownership of the Distributor Account had been transferred into KL's personal account since May or earlier 2020, our client has suffered losses since then as our client has not been remunerated pursuant to the agreement with Kenneth Lee. (own emphasis added) [30] Notwithstanding the dispute between the Plaintiff and the Defendant on whether there was actually a change of ownership of the Distributorship Account, the Plaintiff had adamantly insisted and taken the position, prior to and after the filing of this Application, in particular in paragraph 6 the Plaintiff Affidavit In Reply, that there was a change of ownership of the Distributorship Account from Kenneth Lee to K Mark Network. [31] The Plaintiff has further made it abundantly clear that it was never informed of and/or has never consented to the transfer of ownership of the Distributor Account from K Mark Network to Kenneth Lee. The Plaintiff relied on the said Form as proof of the alleged change of ownership. [32] Therefore, based on the Plaintiff’s own averments in the Plaintiff’s Affidavit In Support and Affidavit In Reply as well as the Police Report and the Plaintiff’s solicitors letter of 10.12.2020, the Plaintiff’s position can be summarised as follow: Page 16 of 32 i) By way of the Partnership Agreement dated 29.8.2018 Kenneth Lee had agreed to assign the Distributorship Account to K Mark Network and all the operations of the Distributorship Account were to be managed and run by K Mark Network for the sale of the Defendant’s product. ii) Around August 2020, the Plaintiff discovered that no payment was made into K Mark Network’s bank account. iii) Through enquiries with the Defendant, the Plaintiff was informed by the Defendant that Kenneth Lee had instructed the Defendant to pay the commission from the sales under the Distributorship Account to Kenneth Lee’s personal account. iv) The Plaintiff and the other partners of K Mark Network did not agree that the commission from the sales under the Distributorship Account be paid to Kenneth Lee’s personal account and that this instruction by Kenneth Lee was done without the Plaintiff and the other partners of K Mark Network’s knowledge (“Kenneth Lee’s Instruction to Change Payment of Commission”). v) The Plaintiff never consented to the change of the Distributorship Account from K Mark Network to Kenneth Lee (“Kenneth Lee’s Change of the Ownership of the Distributorship Account”). vi) As the Plaintiff was not aware of Kenneth Lee’s Instruction to Change Payment of Commission and Kenneth Lee’s Change of the Ownership of the Distributorship Account the Plaintiff therefore suspects the written consent or letter of authorisation or any supporting documents submitted by Kenneth Lee to the Defendant Page 17 of 32 might be fraudulently obtained or the signatures therein might be forged. [33] By letter dated 26.1.20221, the Defendant’s solicitors responded to the Plaintiff’s solicitors’ letter of 10.12.2020, inter alia, as follows: “1. The change of name application was done upon the request of Mr Kenneth Lee, as the principal account holder and a report of suspicious activities was made by Mr Kenneth Lee; 2. Our client was not provided with any written consent or letter of authorisation which may be fraudulently obtained or forged for the change of name application; and 3. As the current account is held under the name of Mr Kenneth Lee, our client is under no obligation to provide any documents or information to you as requested in your letter.” (own emphases added) [34] From the Defendant’s solicitors’ above letter of 26.1.2020 and the averments made in the Defendant’s Affidavit In Reply, it can be ascertained that: i) The Distributorship Account was in the name of the Kenneth Lee from 2015 (when it was changed from Kenneth Lee’s father, Lee Lip Beng to him) and not K Mark Network. ii) Kenneth Lee is the registered principal owner of the Distributorship Account and not K Mark Network. iii) Kenneth Lee affected a change of name of the Distributorship Account from his name to K Mark Network. Page 18 of 32 iv) Being the registered principal owner of the Distributor Account and being an individual, Kenneth Lee is entitled to apply for any change of the Distributor Account (paragraph 8 of the Defendant’s Affidavit In Reply). [35] Even if the Defendant’s explanation or clarification is accepted which facts varies somewhat from the Plaintiff’s version, this does not change the fact that the Plaintiff is still able to identify the alleged wrongdoings of Kenneth Lee and that the variation of some of the facts between the Plaintiff’s and Defendant’s versions would not make a difference. This can be seen from the following alleged wrongdoings of Kenneth Lee which were identified by the Plaintiff in particular in its Police Report: i) Kenneth Lee had not assigned the Distributorship Account to K Mark Network in breach of the Partnership Agreement dated 29.8.2018. ii) Kenneth Lee did not assign all the operations of the Distributorship Account for the sale of the Defendant’s product to K Mark Network in breach of the Partnership Agreement dated 29.8.2018. iii) Instead Kenneth Lee had operated the Distributorship Account for the sale of the Defendant’s product in his personal capacity when it should be operated by K Mark Network in breach of the Partnership Agreement dated 29.8.2018. iv) Kenneth Lee’s Instruction to Change Payment of Commission is in breach of the Partnership Agreement dated 29.8.2018. Page 19 of 32 v) Kenneth Lee had therefore misappropriated funds belonging to K Mark Network and its partners. [36] In the circumstances, there is no reason for this Application when the Plaintiff can and has, in effect: i) identified the identity of the person it intends to make a claim against; and ii) the cause or causes of action against that person, namely, for: a) Breach of contract (the terms of the Partnership Agreement dated 29.8.2018); b) Fraud and/or forgery; c) Misappropriation of funds. [37] In this regard, in dealing with an Order 24 Rule 7A ROC application the Court of Appeal in Bandar Utama Development Sdn Bhd & Anor v. Bandar Utama 1 JMB [2018] MLJU 697 held as follows: “[12] Pre-action discovery is not related to contractual parties but it is addressed to third party who maybe tortfeasors, etc. or parties who are necessary for the purported plaintiff to succeed in a claim or a potential party to be the defendant. As a general rule, preaction discovery can relate to proposed cause of action as well as relief. The threshold test to satisfy an order for pre-action discovery at common law was high in contrast to application for discovery in an action. The threshold test to satisfy an order for pre-action discovery under Order 24 rule 7A is extremely high in contrast to common law right, as the rules sets out specific requirements and the court must exercise its power with caution and circumspect. It is a power Page 20 of 32 which must be exercised in a genuine case and not for the purpose of annoying a third party or in cases related to fishing expedition, etc.” ……… “[16] An application under Order 24 rule 7A has many riders in addition to what needs to be satisfied under the Norwich principle. In addition, the right of discovery under the rules cannot be equated to a procedural right. It still will fall under the Norwich Pharmacal order which is stated as an equitable remedy. Being an equitable remedy, it will not be granted as of right. It is trite that those who seek equitable remedy is required to come with clean hands. If there is an alternative remedy available that must be resorted or if an action can be filed without pre-action discovery, it ought to be filed and subsequently discovery orders should be obtained through normal process. Courts, through their judgment should not open the door to pre-action discovery when identifiable cause of action has arisen. For example, (a) if the claim is for contractual breach; or (b) for a tort like normal road accident cases - an action ought to be filed first and thereafter discovery order should be sought. In such cases, it will be an abuse of process to approach the court by pre-action discovery application. [17] ln this respect, Order 25 rule 7A (5) must be strictly construed by court to ensure the equitable remedy is not abused. In addition, there must be real material before the court to grant the order. It cannot be based on evidence lacking credibility or surmise or conjecture, etc. Order 24 rule 7A(5) reads as follows: “(5) An order for the discovery of documents before the commencement of proceedings or for the discovery of documents by a person who is not a party to the proceedings may be made by the Court for the purpose of or with a view to identifying possible parties to any proceedings in such circumstances where the Court thinks it just to make such an order, and on such terms as it thinks just.” [18] It must be noted that Order 24 is ‘fact centric’. Pure reliance of cases within and outside the jurisdiction as a general rule will not tie the hands Page 21 of 32 of the court in the exercise of its discretionary powers. The test whether or not to grant an order is set out in Order 24 rule 8 itself which reads as follows: “Discovery to be ordered only if necessary (0. 24, r. 8) 8. On the hearing of an application for an order under rule 3, 7 or 7A, the Court, if satisfied that discovery is not necessary, or not necessary at that stage of the cause or matter, may dismiss or adjourn the application and shall in any case refuse to make such an order if and so far as it is of the opinion that discovery is not necessary either for disposing fairly of the cause or matter or for saving costs." [19] ln essence, the court is not required to lean towards the applicant unless the applicant has made out a strong case for the equitable relief to be granted and the respondent has not been able to credibly deny the applicant’s assertion or satisfy the court that alternative relief is or are open to the applicant. Having examined further section 105 and the Fourth Schedule to the SMA 2013, we are in agreement with the appellants that the respondent’s concerns and complaints ought to be address in that forum.” (own emphases added) [38] Applying the principles laid out in the Bandar Utama (supra) case to the present case, I find that: i) As the Plaintiff has already identified Kenneth Lee as the person it has a potential claim against and the causes of action against Kenneth Lee there is not purpose for this Application. ii) Since an action can be filed without pre-action discovery, the Plaintiff can proceed to file a claim and if it later requires further documents, the Plaintiff is entitled to subsequently apply for discovery orders, which would still be available to the Plaintiff under the applicable provisions of Order 24 ROC (Order 24 Rule 8 ROC). Page 22 of 32 iii) The Plaintiff ought not resort to this Application under Order 24 Rule 7A ROC. The threshold test of this Application is extremely high in contrast with the common law right and as the pre-action discovery is an equitable relief it requires the Plaintiff to come with clean hands. In this regard the Plaintiff did not exhibit the Partnership Agreement dated 29.8.2018 in the Plaintiff’s Affidavit In Support and Affidavit In Reply nor referred to it specifically in both these Affidavits. The Plaintiff also did not mention the Partnership Agreement dated 29.8.2018 in the Plaintiff’s solicitors’ letter of 10.12.2020. The Partnership Agreement dated 29.8.2018 was only discovered through the Police Report which was exhibited in the Plaintiff’s Affidavit In Support. The Partnership Agreement dated 29.8.2018 would have shed light on the exact terms which the Plaintiff complained Kenneth Lee had breached. By not referring or raising the Partnership Agreement dated 29.8.2018 specifically in its Affidavit In Support and Affidavit In Reply, the Plaintiff has not come to the Court with clean hands. iv) This Application will only be allowed in a genuine case and is not for the purpose of annoying a third party or if it is a “fishing expedition” where the Plaintiff seeks to better its position. [39] It was submitted on behalf of the Defendant that the Plaintiff was seeking to better its position by making this Application and relied on the case of Soon Keak Shon v. Pengarah Jabatan Bomba Dan Penyelamat Malaysia Negeri Johor & Anor [2020] MLJU 910, a case involving a pre-action discovery application under Order 24 Rule 7A ROC where it was held as follows: Page 23 of 32 [15] ln the case of CHIN MUN FONG V STANDARD CHARTERED BANK [2012] SGCA 38, the Court of Appeal highlighted that an application for pre-action discovery would only be “necessary” where it enables the potential plaintiff to formulate his or her case for the purposes of commencing an action.” ……… “[18] ln the circumstances, the sole issue before the Court of Appeal was whether the Appellant’s application for pre-action discovery was “necessary”. Citing with approval the case of KUAH KOK KIM V ERNST & YOUNG [1996] 3 SLR(R) 485, the Court noted that the purpose of preaction discovery is to assist a claimant in deciding whether he or she has a viable claim against the defendant. However pre-action discovery may not be granted where a plaintiff is seeking to strengthen an existing cause of action. In such a situation, discovery should only be allowed after the action has commenced. [19] Accordingly, pre-action discovery would only be “necessary” where a potential plaintiff is unable to formally state a case as he does not yet know whether he has a viable claim, and requires pre-action discovery to fill the gaps in his knowledge. It is unnecessary where an individual is already in a position to commence proceedings. [20] The Court also stressed that when commencing an action, a plaintiff’s Statement of Claim need only contain facts and not evidence. It therefore follows that the function of pre-action discovery is to put an applicant in possession of sufficient facts to formulate a claim, as opposed to providing a claimant with evidence to assess the strength of his claim. [21] Applying the above to the facts, the Court found that the Appellant was already contemplating making claims against the Respondent for breach of contract and tortuous negligence, and had sufficient facts to formulate her case. Accordingly, since the Appellant already knew the basis for her intended causes of action, the discovery of the voice-logs was not “necessary” for her to institute her intended action. Allowing discovery of the voice-logs would only grant the Appellant the benefit of determining whether she was likely to succeed at trial. In the normal course, this is a benefit that Page 24 of 32 the Appellant would only be entitled to in the discovery process after proceedings had commenced.” (own emphases added) [40] I agree that the Plaintiff, similar to the case of Soon Keak Shon (supra), is trying to better its position before commencing its intended action against Kenneth Lee. [41] It is important to highlight that in Bandar Utama (supra) a distinction was made between the common law discovery threshold test based on the English House of Lords case of Norwich Pharmacal Co v. Customs & Excise Commissioners [1974] AC 133 and a pre-action discovery threshold under Order 24 Rule 7A ROC. The later being a higher threshold as it “has many riders in addition to what needs to be satisfied under the Norwich principle”. [42] Therefore, a pre-action discovery is more stringent and more onerous to satisfy compared to a discovery after the commencement of an action. It cannot be taken lightly and is a Court’s discretionary power which should be exercise with great care. [43] The rationale of this high threshold test can also be seen from Order 24 Rule 7A(9) ROC which states: “(9) Unless the Court orders otherwise, where an application is made in accordance with this rule for an order, the person against whom the order is sought shall be entitled to his costs of the application, and of complying with any order made thereon on an indemnity basis.” (own emphases added) [44] Based on Order 24 Rule 7A(9) ROC, it is not the applicant of the pre-action discovery under Order 24 Rule 7A ROC who will be awarded Page 25 of 32 costs of the application but the person against whom the discovery order is sought and further costs on an indemnity basis to that person for complying with any order made thereon. [45] This provision is not found in a discovery after commencement of an action and is specifically for a pre-action discovery which includes discovery against a non-party to the proceedings (Order 24Rule 7A(1) and (2) ROC). [46] This shows how special care and treatment is regarded to a party whom the pre-action discovery order is sought as well as a non-party to the proceedings or action. [47] The simple reasoning behind this is that the person against whom the discovery order is made is not involved in the proceedings or potential claim but reliefs are sought against that person to assist the applicant. [48] Hence the Plaintiff cannot consider that this Application for pre-action discovery of documents would be granted as of right (Bandar Utama (supra)) and neither can it be said that there is no harm for the Defendant to simply provide the documents requested when the threshold test of whether an applicant is entitled to pre-action discovery is very high. [49] In support of this Application the Plaintiff relied on the case of Infoline Sdn Bhd v. Benjamin Lim Keong Hoe [2017] 8 CLJ 554 and in particular the following passage by the Court Appeal: [12] O. 24 r. 7A is a new provision inserted under the Rules of Court 2012. Under the old regime of the Rules of the High Court 1980, any person wishing to seek or obtain discovery or disclosure of documents prior to the initiation of action could only do so under the principles established in the House of Lords’ decision in Norwich Pharmacal Co v. Customs & Excise Page 26 of 32 Commissioners [1974] AC 133. Up until then, the courts did not order discovery against a person who is not a party to any proceedings, save at the trial and generally under pain of a subpoena duces tecum for the person in whose possession, custody or control the documents are with, to attend court as a witness and to produce such documents relevant to the proceedings. In Norwich Pharmacal Co emanated the principle that discovery may be ordered against defendants who are themselves not the wrongdoers but have somehow "got mixed up in the tortious acts of others so as to facilitate their wrongdoing although through no fault of his own he may incur no personal liability but he comes under a duty to assist the person who had been wronged by giving him full information and disclosing the identity of the wrongdoers”. And, even then, the action was instituted specifically to obtain discovery against the respondent there who were not themselves wrongdoers." (own emphases added) [50] I note that in Infoline (supra) which referred to Norwich Pharmacal (supra) the Court of Appeal recognises that pre-action discovery can be made against a person who is not the wrongdoer to assist in disclosing the identity of the wrongdoer. However, in the instant case the wrongdoer has been identified by the Plaintiff and the Plaintiff has even formulated or, at the very least, has enough information to formulate a case against Kenneth Lee including the cause or causes of action. E] THE DOCUMENTS REQUESTED AND “FISHING EXPEDITION” [51] With regards to the alleged fraudulent or forged documents which pertains to prayer (a)(i) of this Application, being the “Surat persetujuan, surat kebenaran dan/atau apa-apa dokumen lain” which were alleged to have been submitted by Kenneth Lee to the Defendant for the change of the Distributorship Account from K Mark Network to Kenneth Lee, it Page 27 of 32 must be noted that the Plaintiff is in possession of the said Form. The Plaintiff vehemently claims the said Form shows that ownership of the Distributorship Account was changed from K Mark Network to Kenneth Lee. That being the case, based on its own averment, the Plaintiff is able to identify and formulate a claim against Kenneth Lee as the Plaintiff had also averred that this act by Kenneth Lee is against the Partnership Agreement dated 29.8.2018. The Plaintiff never consented to such a change of ownership. [52] It would also follow that the Plaintiff never executed any “Surat persetujuan, surat kebenaran dan/atau apa-apa dokumen lain”. [53] It must be emphasised that in the Plaintiff’s solicitors’ letter of 10.12.2020 the query to the Defendant was regarding copies of these documents alleged to be forged which the Defendant’s solicitors responded vide their letter dated 26.1.2021 that there were none. [54] The Plaintiff cannot therefore fault the Defendant for not providing the documents in prayer (a)(i) of this Application when the Plaintiff’s question was specifically referring to fraudulent or forged documents. The Defendant, via their solicitors, merely replied to the Plaintiff own question. [55] Further, the Defendant had also confirmed in the Defendant’s solicitors’ letter dated 26.1.2021 and in the Defendant’s Affidavit In Reply that the Distributorship Account was at all material times (since 2015) in the name of the registered principle holder, Kenneth Lee. [56] The Plaintiff has been given the answers to its queries through the Defendant’s solicitors’ letter dated 26.1.2021 and by way of the Defendant’s Affidavit In Reply. The Plaintiff has therefore obtained Page 28 of 32 affidavit evidence made under oath as well the Defendant’s solicitors’ letter, so what then is the Plaintiff complaint? [57] One of the main reasons the Plaintiff filed this Application is because it did not agree with the Defendant’s replies as can be seen in, inter alia, the Plaintiff’s Affidavit In Reply. [58] It is argued on behalf of the Defendant that the Plaintiff is embarking on a fishing expedition and I agree with this argument. [59] Whilst the Plaintiff already has enough information or facts to formulate a case against the Kenneth Lee, it nevertheless seeks to obtain more evidence to strengthen its intended case (Soon Keak Shon (supra)). [60] In the High Court case of Ong Commodities Pte Ltd v. Kek Tek Huat Sdn Bhd & Anor [2015] 10 CLJ 585, Justice Vazeer Alam (now Judge of the Court of Appeal) held as follows: [26] The plaintiff has stated in the grounds in support of this application that the plaintiff has reason to believe that the defendants had conducted themselves fraudulently or in an otherwise improper or negligent manner in respect of the charge; and therefore the plaintiff seeks to obtain sufficient documentary evidence from the defendants to put the plaintiff in a position where it is able to make a reasonable assessment of the situation and decide whether to institute an action against the first defendant and/or such other parties. This express desire of the plaintiff is but a manifestation of an intention to go on a fishing expedition, in hope that something may get entangled in the net and finding some material upon which a charge could be hung. That is never the purpose of a pre-action discovery order. See ABX Logistics (Malaysia) Sdn Bhd v. Overseas Bechtel (Malaysia) Sdn Bhd [2003] 7 CLJ 357. It is quite clear that the plaintiff has embarked on a fishing expedition and cast the net wide to seek information and documents from the defendants, which documents the defendants do not have, in the hope of stringing together a possible case against the defendants. That is not the Page 29 of 32 purpose for an order of discovery. Mustil LJ in Berkeley Administration Inc v. McClelland [1990] FSR 381 at p. 383 held that: It is plain ... that the plaintiff just does not believe anything that the defendants have said in the course of this discovery, and would like to hunt around the documents in the hope that something useful would turn up enabling them to controvert what the defendants have said on oath. That is not what discovery is about at all. The plaintiff is not entitled to an order for discovery of documents based on some hunch or intuition that the defendants have committed some wrongful or fraudulent acts against the plaintiff. The law on discovery is well settled ie, in the absence of a proper basis for an order for discovery, disclosure should not be allowed. [27] The plaintiff alleges that the defendants have committed some fraudulent or wrongful acts. In this regard, the plaintiff bears the burden of proving fraud, improper conduct or negligence against the defendants. Now, it is trite that an order of discovery will not be made, where the effect of such an order would have the effect of shifting the burden of proving fraud or impropriety from the plaintiff to the defendants. Not only is the plaintiff seeking to shift the burden of proof, it is also seeking to incriminate the defendants. In such circumstance, an order of discovery cannot be made. See Kenwood Electronics (Malaysia) Sdn Bhd v. People’s Audio Sdn Bhd & Ors [2003] 5 CLJ 436; [2003] 2 AMR 70, HC; Triplex Safety Glass Co Ltd v. Lancegaye Safety Glass (1934) Ltd [1939] 2 KB 395; and Mary Ng v. R [1958] AC 173. (own emphases added) [61] The above passage from Ong Commodities (supra) is apt and similarly here in this present case I find that the Plaintiff is seeking to cast a wide net on the possibility of stringing in the Defendant into its intended claim against Kenneth Lee. [62] It must be noted that the Plaintiff’s ground in support of this Application was to determine or formulate an intended cause of action and claim against Kenneth Lee and not the Defendant. Page 30 of 32 [63] Interestingly, the Plaintiff has not sought the Documents or information from the Kenneth Lee himself when the Documents would be within Kenneth Lee’s personal knowledge. [64] With regard to the Documents itself, apart from the Document stated in prayer (a)(i) of this Application, prayers (a)(ii) and (iii) are not documents and are in fact information. Therefore, they clearly fall outside the ambits of Order 24 Rule 7A ROC which are for pre-action discovery of documents. F] CONCLUSION [65] The Documents sought by the Plaintiff are not necessary and based on the averments made by the Plaintiff and the information available to it, the Plaintiff is able to identify the wrongdoer and formulate its claim. [66] That being the case, it is reasonable for this Court to conclude that the Plaintiff is on a “fishing expedition” to better its position and obtain further evidence to strengthen its intended claim against Kenneth Lee which goes against the intent and purpose of a pre-action discovery under Order 24 Rule 7A ROC (Soon Keak Shon (supra) and Bandar Utama (supra)). [67] In any event, it is still available to the Plaintiff to seek discovery after the commencement of the proceedings or action under Order 24 Rule 8 ROC. [68] Prayers (a)(ii) and (iii) of this Application are not documents but information which are outside of the scope of Order 24 Rule 7A ROC. Page 31 of 32 [69] In this regard and in any event, it would be more appropriate to deal with the discovery of documents pertaining to the account details on what Kenneth Lee had allegedly wrongly received from the Distributorship Account after an action is filed. [70] Based on the aforesaid reasons, I dismissed this Application and having heard arguments on costs, awarded costs of RM7,000.00 in favour of the Defendant. Dated this 1st day of October, 2021 -SGD- (WAN MUHAMMAD AMIN BIN WAN YAHYA) Judicial Commissioner High Court of Malaya, Kuala Lumpur (Commercial Division (NCC 3)) COUNSEL FOR THE PLAINTIFF Tee Chin Hian (together with Yap Siew Yee) Messrs Yap Siew Yee & Co. Suite 1222, 12th Floor, Block A (Lobby 5) Damansara Intan Business Centre No. 1, Jalan SS 20/27 47400 Petailng Jaya, Selangor Darul Ehsan. Tel.: 03-77329601 Fax: 03-7732 9603 Email: teechinhian@ysyco.com Page 32 of 32 COUNSEL FOR THE DEFENDANT Toh Xin Yi (together with Harjinder Kaur) Messrs Shahrizat Rashid & Lee Ground Floor & First Floor, Wisma Prima 17, Jalan Sri Semantan Satu Damansara Heights 50490 Kuala Lumpur. Tel.: 03-2710 5555 Fax: 03-2710 3109 Email: srl@srl-law.com.my LEGISLATION / RULES CITED Rules of Court, 2012 ▪ Order 24 Rule 7A ▪ Order 24 Rule 7A(9) ▪ Order 24 Rule 8 Courts of Judicature Act 1964 ▪ Paragraph 14 Schedule, Courts of Judicature Act 1964 (Section 25(2)) CASES CITED 1. Bandar Utama Development Sdn Bhd & Anor v. Bandar Utama 1 JMB [2018] MLJU 697 2. Soon Keak Shon v. Pengarah Jabatan Bomba Dan Penyelamat Malaysia Negeri Johor & Anor [2020] MLJU 910 3. Norwich Pharmacal Co v. Customs & Excise Commissioners [1974] AC 133 4. Infoline Sdn Bhd v. Benjamin Lim Keong Hoe [2017] 8 CLJ 554 5. Ong Commodities Pte Ltd v. Kek Tek Huat Sdn Bhd & Anor [2015] 10 CLJ 585