Chew Meu Jong v Lysaght (Malaysia) Sdn Bhd (WA-24NCC-178-05/2017)

LIEW SWEE MIO @ LIEW HOI FOO (No. K/P: 550510-01-5939)

WTWT SDN BHD (No. Syarikat: 286426-V)

YUSUF BIN JAMIL (No. K/P: 640605-10-7835)

BINA SECURITIES & MANAGEMENT SDN BHD (No. Syarikat: 17808-K)

FAROY SDN BHD … PENCELAH- 15 (No. Syarikat: 125846-K) PENCELAH GROUNDS OF DECISION 20 [1] Vide the Notice of Application (encl. 26) the 1st and 2nd Interveners primarily sought to disqualify Messrs. Cheang & Ariff from representing the Plaintiff. [2] The crucial background facts are:

The Plaintiff has filed an Originating Summons on 5/5/2017

(ii) On 8/8/2017, I had allowed the Interveners’ application to 30 intervene (encls. 3, 9 and 11).

(iii) The 1st and 2nd Interveners, Liew Swee Mio @ Liew Hoi Foo and WTWT Sdn Bhd have on 14/9/2017 filed an application for an order that Messrs. Cheang & Ariff be disallowed or be recused from acting as a solicitors for the Plaintiff, Chew Meu Jong.

(iv) The brief grounds of this application are as follows: 3

Messrs. Cheang & Ariff has breached r.5(b)(i) of the Legal 5 Profession (Practice and Etiquette) Rules 1978 (‘Etiquette Rules’);

By representing the Plaintiff, Messrs. Cheang & Ariff has placed its firm in a conflict of interest situation with the Defendant. This is due to the fact that since 2011, Messrs. 10 Cheang & Ariff was appointed by the Defendant as legal advisor of the Defendant company, had also acted for

in drafting the Sale and Purchase of Shares Agreement dated 17/4/2014 in relation to the sale of 15 shares of the Defendant company from United

(ii) being the 1st Defendant in KL High Court Originating Summons No. 24NCC-231-07/2014 (‘OS 231’) filed in relation to the interpretation of Article 36A Articles 20 of Association and the validity of the Defendant’s company’s share offer from UEL to the Chew Bros.

and had in actual fact provided legal advice on the operations of the Defendant’s company including the company’s dividend policy, Articles in the Constitution, 25 shareholders’ entitlement to Audited Financial Statements and on the issue of removal of Directors;

On 25/8/2011, Mr. Kelvin Seet Wan Nam (‘Mr. Kelvin Seet’), a solicitor from Messrs. Cheang & Ariff had attended the 32nd Annual General Meeting (‘the AGM’) of 30 the Defendant company as the legal advisor of the Defendant and had advised on various issues of the 4 Defendant company, its affairs and on the Company’s 5

Messrs. Cheang & Ariff has full access to confidential information and documents of the Defendant company;

Messrs. Cheang & Ariff had acted for a shareholder of the Defendant i.e. Chew Bros. in relation to a share sale 10 agreement. Plaintiff’s arguments [3] The Plaintiff contended that -

The 1st and 2nd Interveners have no locus standi to file the 15 application as their complaint against the Plaintiff was that Messrs. Cheang & Ariff had purportedly advised the Defendant previously. If at all there is any valid complaint, the proper person to complain is the Defendant and not the 1st and 2nd Interveners.

(ii) The 1st and 2nd Interveners’ complaint that Messrs. Cheang & 20 Ariff had acted for a shareholder of the Defendant i.e. Chew Bros. in relation to a share sale agreement is a non-starter because Messrs. Cheang & Ariff was not acting for the Defendant in these matters. Further, the present suit is not about the share sale agreement.

(iii) In relation to the 1st and 2nd Interveners’ complaint that Mr. 25 Kelvin Seet attended the Defendant’s 2011 AGM, they had only made general and vague allegations that his name appeared as the Defendant’s legal advisor in the minutes of 2011 AGM and in a letter dated 31/10/2011 where Mr. Kelvin Seet was referred to as ‘the Company’s legal advisor’. With this alone, the 1st and 2nd Interveners 30 made bare and baseless allegations that Messrs. Cheang & Ariff has been acting for the Defendant since 2011.

(iv) As the 1st and 2nd Interveners are not the Defendant, they are 5 merely making an assumption that the Defendant had disclosed 5 confidential information to Messrs. Cheang & Ariff which would place the firm in a conflict of interest situation. Further, they failed to particularise the alleged confidential information that was purportedly disclosed to Messrs. Cheang & Ariff by the Defendant, and whether such information would place Messrs. Cheang & Ariff in a conflict of 10 interest position.

The 1st and 2nd Interveners’ application is frivolous and vexatious having been taken out at a very late stage without any reasonable explanation for its delay, is disruptive and prejudicial to the Plaintiff’s case.

(vi) Messrs. Cheang & Ariff did not breach any rules in particular r.5(b)(i) of the Etiquette Rules. The appointment of Messrs. Cheang & Ariff to act for the Plaintiff is valid and is not in conflict.

(vii) The burden of proof lies heavily on the 1st and 2nd Interveners and that a strong case must be made out. The 1st and 2nd 20 Interveners failed to discharge their burden of proof to disqualify Messrs. Cheang & Ariff. Findings [4] R.5(b)(i) of the Etiquette Rules provides - 25 “Rule 5. No advocate and solicitor to accept brief if difficult to maintain professional independence. … 30

(b)(i) An advocate and solicitor who has at any time advised or drawn pleadings or acted for a party in connection with the institution or prosecution or defence of any suit, appeal of other proceedings shall not act, appear or plead for the opposite party in that suit, appeal or other proceedings.”. 35 6 [5] It is to be noted that the Originating Summons of the Plaintiff 5 seeks, amongst others, that Articles 57, 80 and 97 of the Constitution of the Defendant company (formerly known as the Memorandum & Articles of Association (M&A)) be altered and/or amended as per the ‘Proposed Amendments to Articles 57, 80 and 97 of the Constitution’ (Annexure A) attached therein (encl.1). 10 Merits of 1st and 2nd Interveners’ application [6] At the outset I am persuaded by the Plaintiff’s submission that the 1st and 2nd Interveners have no locus standi to file the Notice of Application (encl. 26) to disqualify Messrs. Cheang & Ariff from 15 representing the Plaintiff as their complaint against the Plaintiff was that Messrs. Cheang & Ariff had purportedly advised the Defendant previously. If there is any valid complaint (which I shall deal with in due course), the proper person to complain is the Defendant and not the 1st and 2nd Interveners. On this ground alone, encl.26 ought to 20 be dismissed. [7] In Mirza Mohamed Tariq Beg Mirza HH Beg v. Margaret Low Saw Hui & Ors [2009] 4 CLJ 303 at 313 [316] para G-H, Raus Sharif JCA (as he then was) (delivering the judgment of the Court of 25 Appeal) stated - “... In order to bar a solicitor or other fiduciary from acting, the applicant must place before the court full particulars of the relevant confidential information that was allegedly disclosed to the solicitor or fiduciary. Mere general or vague allegations are insufficient. As was stated in State v. Lalit 30 Mohan Nanda AIR [1961] Orissa 1: ... the onus of proving that confidential information was conveyed lies heavily upon the applicant ...”. At 315[24], His Lordship further opined - 7 5 “… I am of the view that a strong case must be made out before preventing counsel from acting in a particular case on the ground of conflict of interest. The onus of proof lies on the party alleging the conflict …”. [8] Rule 6.05(2) of the Rules and Rulings of the Bar Council of 10 Malaysia states - “An Advocate and Solicitor who acts for a client in various existing civil suits may also act for another party against that client in an unrelated suit, unless that client can show that specific information may be used by that Advocate and Solicitor giving rise to a conflict of interest or that the 15 Advocate and Solicitor holds a current retainer from that client”. [9] I find there is no merit with regard to the 1st and 2nd Interveners’ complaint in para 2(iv)(b)(i) & (ii) above which is but a non-starter. To begin with Messrs. Cheang & Ariff was not acting for the Defendant in 20 these matters but for Chew Bros., a shareholder of the Defendant; further, the present action is not about the share sale agreement because the validity of the share sale agreement had already been ventilated and decided by Wong Kian Kheong JC (as he then was) who held that the share sale transaction between UEL to the Chew 25 Bros. was valid. There was no appeal against the said decision. [10] In respect of the 1st and 2nd Interveners’ complaint in para 2(iv)(d) above, being mindful of the foregoing authorities cited, I agreed with the submission of the Plaintiff that the 1st and 2nd Interveners had failed to particularise or prove - 30

full particulars of the alleged confidential information that was purportedly disclosed to Messrs. Cheang & Ariff by the Defendant, and whether such information would place Messrs. Cheang & Ariff in a conflict of interest position [see Mirza (supra)]; 8

(ii) that Messrs. Cheang & Ariff had advised or acted for the 5 Defendant in any way relating to this action which is about the amendment of certain Articles in the AA due to the exit of UEL as a shareholder. This could not have happened because when Mr. Kelvin Seet attended the 2011 AGM, UEL was still a shareholder of the Defendant and the share sale agreement had not even been 10 signed yet;

(iii) that Messrs. Cheang & Ariff was appointed by the Defendant since 2011 until today to advise the Defendant, save for the fact that Mr. Kelvin Seet was appointed to advise and address any legal issues that might have arisen at the 2011 AGM;

(iv) the confidential information that Mr. Kelvin Seet had access to in the 2011 AGM has been used against the Defendant in this suit;

the nexus between the advice given by Mr. Kelvin Seet at the 2011 AGM and the Plaintiff’s present action, which ought to adversely affect the Defendant;

(vi) that any confidential information pertaining to this action had been received by Messrs. Cheang & Ariff from the Defendant;

(vii) that any confidential information was received by Messrs. Cheang & Ariff in OS-231 (from the Defendant), which purportedly has been used adversely against the Defendant in this suit. This 25 could not happen as Messrs. Cheang & Ariff was not acting for the Defendant in OS-231; and

(viii) that any confidential information was received by Messrs. Cheang & Ariff from the Defendant while drafting the sale and purchase of shares agreement between UEL and Chew Bros. This 30 could not happen as Cheang & Ariff was not acting for the Defendant in the share sale transaction. 9 5 [11] In addition to the matters above, I find the 1st and 2nd Interveners had failed to disclose the following material facts:

the very fact that during the 2011 AGM, Mr. Kelvin Seet had expressly said that he will not interpret what Article 80 of the AA means because that is the role of the Court (exh.“LHF-3”). The 10 relevant parts of the minutes are reproduced as follows: ‘Mr. Liew (1st Intervener who also affirmed Affidavit on behalf of 2nd Intervener in this present Suit) wants Mr. Kelvin Seet to interpret Article 80. Mr. Kelvin Seet was of the view that if there is any dispute to the interpretation of the Articles of Association, it is the function of the Court, 15 and a shareholders’ meeting is not the appropriate forum to discuss interpretation of Articles of Association.’; and

(ii) that the Defendant was represented by Messrs Sreneevasan Young in OS-231 and not Messrs. Cheang & Ariff (pg 70, exh.“LHF- 6”). The 2nd Intervener who initiated this action (and the 1st 20 Intervener who signed all the affidavits) did not raise any issue on conflict of interest at all material times when Messrs.Cheang & Ariff acted for Chew Bros. [12] The relevant cases cited by the 1st and 2nd Interveners in support of their position that Messrs. Cheang & Ariff ought to be 25 recused from representing the Plaintiff on ground of conflict of interest can be distinguished. [12.1] In Ng Siew Lan v. John Lee Tsun Vui & Anor [2017] 2 CLJ 245, at 247, the Federal Court, amongst others, held - “The first and second defendants had acted for NCT while still acting 30 for the plaintiff; they had placed themselves in a situation of conflict of interest. There was no valid justification for compromising on the plaintiff's interest and to betray her trust. The first and second defendants 10 should not have accepted any form of instruction from NCT in connection 5 with the land, even if there was 'no concrete instruction' yet from NCT to buy the land, and that the instruction was 'merely to get a Xerox copy' of the land title, because by doing so, they had evinced a clear intention to act for NCT, which was detrimental to the plaintiff's interest. They should not be serving two masters at one time”. 10 (Emphasis added) (see Held 1 & paras 60-64) Unlike the clear cut evidence of the existence of conflict of interest in Ng Siew Lan (supra), there is no evidence whatsoever to show that Messrs. Cheang & Ariff was acting for the Defendant 15 company. [12.2] The 1st and 2nd Interveners relied on the following passage from the case of Aw Sing Moey & Ors. v Melombong & Perumahan Sdn Bhd [1999] 4 CLJ 721 Held 2: “A counsel who receives briefs for both sides in the same case should not 20 accept one if he has already read the other. Here, Lim had acted for both sides and now wanted to act for one against the other in the same matter. Clearly, Lim and ADSP would be embarrassed”. There is no conflict of interest as Mr. Kelvin Seet of Messrs. Cheang & Ariff was not involved in the same matter as it pertained to 25 unrelated issues or matters in the 2011 AGM (see rule 6.05(2) of the Rules and Rulings of the Bar Council of Malaysia) whilst the present Suit concerned the amendments to Articles under 57, 80 and 97 of the Constitution of the Defendant company. [12.3] In Perbadanan Pembangunan Pulau Pinang v. Tropiland 30 Sdn Bhd [2010] 2 CLJ 1061 the 1st and 2nd Interveners quoted the following passage: “... To seek and maintain 'the best interest of the administration of justice' as envisaged in r. 5(a) of the Legal Profession (Practice & Etiquette) Rules 1978, it is necessary to adopt the strict approach”. 35 11 With respect I find the 1st and 2nd Interveners have not 5 provided the proper context in which the aforesaid passage was quoted. The Court allowed the plaintiff’s application to disqualify Dato’ RK Nathan from appearing as leading counsel for the defendant in 2 consolidated suits not because the Court was more concerned whether there was any conflict arising in the handling of the matter by 10 Dato’ RK Nathan but rather the perception of the general public and whether there was any appearance of impropriety. Therefore this case does not assist the 1st and 2nd Interveners. [12.4] In the case of Quah Poh Keat & Ors v. Ranjit Singh Taram Singh [2009] 4 CLJ 316, the Court of Appeal dismissed the appeal of 15 the defendants/appellants against the High Court’s decision allowing an application by the plaintiff/respondent to disqualify the legal firm of M/s Lee Hishammuddin Allen & Gledhill from acting for the appellants in the action. The respondent alleged that since 2 solicitors of the said legal firm were material witnesses in the suit, a conflict of interest 20 arose disqualifying the legal firm from acting as solicitors for the appellants. The Court of Appeal upheld the view that the High Court’s ruling had eliminated “any possible conflict of interest surfacing on the solicitor’s part and simultaneously ensured that the interests of the contesting parties were not compromised.” (see Held (1)). 25 The case of Quah Poh Keat (supra) is not applicable as it related to r.28 of the Etiquette Rules where the solicitor could be a potential witness if he continued acting against the party whom he had once represented. The Court of Appeal held the solicitors who acted for the appellants were potential witnesses. In the present Suit before 30 me there is no question of Mr. Kelvin Seet being a potential witness as the present matter is not about what happened during the 2011 AGM 12 and it is the function of the Court to interpret the disputed Articles of 5 Association as advised by Mr. Kelvin Seet (see para 11(i) above). [13] For the foregoing reasons, having considered the submissions of the parties, the Court dismissed the 1st and 2nd Interveners’ application (encl.26) with costs of RM6,000.00 to be paid by the 1st and 2nd Interveners to the Plaintiff. 10 Dated: 29/4/2018 SGD. (LAU BEE LAN) 15 Judge Counsel for the 1st and 2nd Interveners/Appellants: 20 Encik Annou Xavier together with EncikYong Jia Wei Messrs Azri, Lee Swee Seng & Co Advocates & Solicitors Unit 210, Level 2, Block A 25 Pusat Dagangan Phileo Damansara 2, Jalan 16/11, Off Jalan Damansara 46350 Petaling Jaya Selangor Darul Ehsan 30 Counsel for the Plaintiff/Respondent: Cik Cindy Goh together with Encik Keong Ming Wai 35 Messrs Cheang & Ariff 39 Court @ Loke Mansion 273A Jalan Medan Tuanku 50300 Kuala Lumpur