Cairnhill Hotel (M) Sdn Bhd v Tan Poh Lee (W-02(IM)(NCvC)-790-04/2019)

Tan Poh Lee (I.C. No.: 641112-10-5780)

Tetuan Ian Ghee & Associates … Defendants (Sued as a Firm) 2 CORAM: MARY LIM THIAM SUAN, JCA HAS ZANAH BINTI MEHAT, JCA S NANTHA BALAN, JCA JUDGMENT OF THE COURT [1] On 25.3.2019, the High Court allowed the respondent’s application made pursuant to Order 18 rule 19(1)(a), (b) and/or (d) of the Rules of Court 2012 and struck out the appellant’s claim without any liberty to file afresh on the ground inter alia that the appellant had sued the wrong party. After proper consideration of the matters in issue and in light of the submissions made against the contents of the record of appeal, we unanimously allowed the appeal. The civil action [2] The appellant’s civil action against the respondent and the legal firm of Messrs. Ian Ghee & Associates was in essence a claim for damages for wrongful distress commenced at the Sessions Court at Kuala Lumpur by one Tan Kim Choo Holdings Sdn Bhd [TKCH] and the action taken in relation to that claim. The appellant is a company incorporated for the principal objects of providing hotel services. It runs a hotel at premises identified as Wisma TKC located at No. 478, Batu 3 ½, Jalan Sultan Azlan Shah, 51200, Kuala Lumpur [hotel] that it tenanted from TKCH, as landlord at a monthly rental of 3 RM100,000.00 with GST, pursuant to tenancy agreement dated 1.4.2014. The respondent is one of the 3 shareholders and directors of TKCH; the others being Tan Boon Thien and Tan Kim Choo. Tan Boon Thien is the Managing Director of the appellant. He and the respondent are siblings. Tan Kim Choo was their late father. [3] Vide letter dated 5.10.2015, the appellant was directed to pay part of the monthly rental directly to TKCH and the other towards the medical and other expenses of Tan Kim Choo who suffered a massive stroke in August

The appellant did so accordingly. [4] By letter dated 18.12.2015, the respondent instructed Messrs. Ian Ghee & Associates [2nd defendant] to file an ex parte Originating Summons at the KL Sessions Court for an order to issue a writ of distress on the ground that the appellant had not paid its monthly rental of RM106,000.00 (inclusive of GST) due from September to November 2015. [5] On 29.12.2015, a writ of distress was issued and on 30.12.2015, at about 1.00 p.m., the writ was executed. [6] Two police patrol cars were said to have come to the hotel and “closed the way entering” the hotel. At that material time, the hotel was occupied with guests. The 2nd defendant is alleged to have “ordered” the Court Bailiff to seize the appellant’s assets; and together with its “followers and other Court officers” emptied the appellant’s hotel rooms and the shops in the hotel. According to the narrative, workers and agents of the appellant and 4 the shops were asked to leave the hotel immediately and the hotel was sealed at 5.00 p.m. with the Court officer informing all that no one could enter the hotel until further notice. The 2nd defendant and a few individuals then used iron chains and their master key to lock the entrance of the appellant’s hotel. A few individuals who were said to be the 2nd defendant’s followers “wandered” into the hotel despite the closure. These persons used the hotel facilities including a person by the name of Kevin, who is said to be the 2nd defendant’s brother, stayed at the hotel on 5.6.2016, at or about 6.00 p.m. On that same day, an individual broke into the hotel and stole goods belonging to the hotel. [7] On 8.1.2016, the appellant successfully set aside the distress proceedings. [8] The appellant then sued the respondent and the 2nd defendant for inter alia damages claiming that its business had suffered loss and damage as a result of their unlawful action. It claimed that the distress action was invalid because-i. it was commenced without the express agreement, authority and/or consent of TKCH; ii. that the respondent did not have the directors’ resolution of TKCH authorizing her to appoint solicitors for TKCH and for commencing the distress action; iii. that TKCH never held directors’ meetings to discuss any payment of rental due for the hotel; 5 iv. that the respondent commenced the distress action using TKCH’s name without agreement and/or consent of the board of directors of TKCH; v. that the respondent had given instructions, consent and/or authority purportedly in the name and on behalf of TKCH when she did not have TKCH’s agreement, consent and/or authority to do so. [9] The appellant alleged that the respondent and the 2nd defendant had committed the tort of abuse of process of court as the aim of the distress action was not for a genuine redress but for the collateral purpose of oppressing the appellant; and trespass. The appellant specifically alleged that the respondent’s act of commencing the distress action was out of personal vendetta; that the 2nd defendant, the legal firm, should have known that whatever instructions, consent and/or authority purportedly exercised by the respondent using TKCH’s name and on its behalf was invalid or ultra vires; that the 2nd defendant had committed willful blindness towards the respondent’s lack of authority. [10] After filing her Defence where it was alleged that the action is misconceived, commenced against the wrong parties, that it is an abuse of process and is tainted with mala fides, the respondent applied to strike out the action. The respondent had also denied that there was any written record of any resolution or agreement for the alternative arrangements asserted by the appellant; that any such arrangement was actually a unilateral act of Tan Boon Thien, the Managing Director of the appellant; that such unilateral 6 and/or unlawful deduction of rentals had effectively disrupted the cash flow of TKCH which further jeopardized the financial commitment of TKCH to make its loan repayments to UOB Bank. The respondent claimed that the distress action was instructed “out of necessity” in order to recover the losses and/or rentals due from the appellant. Decision of the High Court [11] The learned Judge agreed with the respondent, finding that she had no direct link to the distress action, that the appellant had admitted as much as evident from the appellant’s own Statement of Claim at paragraphs 2.4,

2.6, 3.7 and 4.1, that the distress action was filed and obtained by TKCH and not by the respondent. Since TKCH is an independent entity separate from the respondent who manages TKCH, the learned Judge lifted the corporate veil and found that the respondent cannot be held liable for the acts of TKCH. Without any cause of action filed against TKCH, and with no averments on whether TKCH agreed, opposed or denied the distress action, the learned Judge further held that any action against the respondent “cannot be sustained.” Decision of the Court of Appeal [12] It is our unanimous view that there was a failure on the part of the learned Judge to appreciate what exactly was the nature of the cause of action filed against the two defendants; that the action was for the tort of abuse of process of court and for trespass; and not simply for taking out the 7 distress proceedings. Learned counsel for the appellant had described it as mischaracterization or misunderstanding of the appellant’s claim; and we agree. [13] In this regard, it is to be noted that the appellant had alleged that it was the respondent who had instructed the 2nd defendant to initiate the distress action in the name of TKCH on the basis that there were outstanding monthly rentals when there was none and in the face of other arrangements on the payment of such rentals. The allegation extended to asserting that the respondent gave instructions for the distress action when she did not have the necessary mandates such as resolutions duly passed by the Board of Directors of TKCH, whether for the purpose of initiating action or for appointing any solicitors, including the 2nd defendant. In other words, the respondent acted unilaterally and for personal reasons; that there was abuse of process of court. As for the 2nd defendant, the appellant’s contention is that the solicitors should have known that whatever instructions, consent and/or authority purportedly exercised by the respondent on the name and on behalf of TKCH in commencing the distress action was invalid and ultra vires. [14] The cause of action is for abuse of process; the complaint is about how the respondent set about instructing and obtaining the writ of distress from the Sessions Court although not properly cloaked with authority. It is not about the order itself but about the respondent instructing and obtaining the distress order when she was not authorized or mandated to do so. 8 [15] We are not at all convinced that this is a plain and obvious case which is unsustainable and which deserves to be struck out in limine. On the contrary, the appellant’s allegations are highly disputed by the respondent and who has countered with her own set of allegations on want of mandate on the appellant’s part over the rental arrangements. [16] More materially before us is the undisputed fact that the distress action was set aside; albeit pending the resolution of issues raised in the present suit. This is admitted by the respondent at paragraph 17 of the Defence. The issues raised in the present suit and thence this appeal relate almost exclusively to the matter of the validity or otherwise of the distress action and what had occurred whilst the order was being executed. [17] Each of these allegations, be it of the appellant or the respondent’s, obviously pertain to matters which are substantially questions of fact which need proper and fuller examination and which cannot be disposed of through an exchange of affidavits. These matters cannot be answered by saying that the appellant had obviously an unsustainable case as there was no cause of action and because the wrong party had been sued. There is a lot more to it than meets the eye and which warrant further examination. [18] The principles on striking out are trite and cannot be better illustrated than in the facts of this case (see Supreme Court decision in Bandar Builder Sdn Bhd & Ors v United Malayan Banking Corporation Bhd [1993] 4 CLJ 7). While the learned Judge has a discretion when it comes to striking out any claim or part of claim, we are of the unanimous view that His Lordship 9 had erred in his exercise of discretion, starting with the misapprehension as to what the appellant’s cause of action is against the respondent. [19] For all the reasons as set out above, we found merits in this appeal. We allowed the appeal with costs in the cause, set aside the decision of the High Court and remitted the case to the High Court for case management and directions for trial. Dated: 5th March 2020 sgd (MARY LIM THIAM SUAN) Judge Court of Appeal Malaysia 10 Counsel/Solicitors For the appellant: Gideon Tan (YJ Yap with him) Messrs. Gideon Tan Razali Zaini No. 812, 8th Floor Block A, Kelana Square No. 17, Jalan SS 7/26 47301 Petaling Jaya For the respondent: Ng Thian Tuan (Tan Sin Yee with him) Messrs. Tuan, Mohd Zain & Co B-08-03 Gateway Corporate Suites Gateway Kiaramas No 1, Jalan Desa Kiara Mont’ Kiara 50480 Kuala Lumpur