Chow Weng Kheong v Ws Weng Soon Electrical Sdn. Bhd. (BA-24NCC-91-08/2023)

WS WENG SOON ELECTRICAL SDN. BHD.

LIEW SIEW SOON

LIM PEE SAN (NO. K/P: 881004-56-5686) [Berniaga di bawah nama dan gaya “WS WENG SOON ELECTRICAL SUPPLY” NO. PENDAFTARAN SA0596655-X) …DEFENDAN-DEFENDAN JUDGMENT Introduction [1] The Plaintiff had commenced an oppression action under section 346 of the Companies Act 2016 against the Defendants by way of Originating Summons (in Enclosure 1). There is nothing irregular as far as the mode of commencement is concerned. Originating Summons is mandated under Order 88 rule 2 of the Rules of Court 2012. [2] The Second and Third Defendants then made an interlocutory application (in Enclosure 34) to convert the Originating Summons proceedings into a Writ action. There is nothing irregular as far as this Notice of Application for conversion is concerned. This is permitted under Order 28 rule 8 of the Rules of Court 2012. [3] At the hearing of the above application in Enclosure 34 on 25 March, 2024, this Court disallowed the application to convert the Originating Summons into Writ. There is nothing irregular about such a decision, as far as this Court is concerned. Dissatisfied with the decision of this Court is dismissing Enclosure 34, the Second and Third Defendants filed a Notice of Appeal on 1 April, 2024 to the Court of Appeal to appeal against this Court’s decision re Enclosure 34. [4] The following are this Court’s grounds of judgment re Enclosure 34. The Underlying Issue [5] The primary and sole issue before this Court was whether this is a proper case for it to exercise its discretion by invoking Order 28 rule 8 of the Rules of Court 2012 to convert the present Originating Summons proceedings into a Writ action. The Parties’ Contention [6] The crux of the Second and Third Defendants’ contention in support of their application in Enclosure 34 was that the action herein was not suitable to be proceeded by way of affidavit evidence as it involved substantial dispute as to facts and witnesses other than the Second and Third Defendants are required to be called upon to defend their case. [7] They pointed to each of the purported oppressive conduct to substantiate their contention that witnesses will have to be called to testify at a trial and these include the Investigating Officer (as a result of a Police Report having been lodged), valuers, accountants, auditors, employees together with the suppliers and/or customers of the First Defendant company. [8] The Second and Third Defendants made reference to and relied on numerous authorities and these include Order 5 rule 4 and Order 28 rule 8 of the Rules of Court 2012 and Ting Ling Kiew & Anor v Tang Eng Iron Works Co Ltd [1992] 1 AMR 90; [1992] 1 CLJ (Rep) 331; [1992] 2 MLJ 217; [1992] 1 MLRA 336 (“Ting Ling Kiew”), Husli Mok v Jundar Realty Development Sdn Bhd & Anor [2014] AMEJ 0207; [2014] 2 CLJ 205; [2014] 3 MLJ 496; [2014] 2 MLRA 630, Commerceone Property Sdn Bhd v Bangsar Trade Centre Sdn Bhd & Ors [2016] 1 LNS 464; [2016] MLJU 1392; [2016] MLRHU 397, Melawangi Sdn Bhd v Tan Hood Tee [2017] AMEJ 0037; [2017] 1 LNS 2; [2017] 1 MLRH 376, VY Plumbing Construction Sdn Bhd v Pembinaan Legenda Unggul Sdn Bhd & Ors [2017] AMEJ 1464; [2017] 1 LNS 1809; [2017] MLJU 1858; [2018] 1 MLRH 340, Tradewinds Properties Sdn Bhd v Zulhkiple A Bakar & Ors [2019] 2 CLJ 261; [2019] 1 MLJ 421; [2019] 1 MLRA 238 and Chin Chee Keong v Toling Corporation (M) Sdn Bhd [[2016] AMCR 634; 2016] 6 CLJ 666; [2016] 3 MLJ 479; [2016] 4 MLRA 180. [9] In response to the Second and Third Defendants submissions, the Plaintiff cited the case of Structural Concrete Sdn Bhd v Wing Tiek Holdings [1997] 1 AMR 598; [1997] 1 CLJ 300; [1997] 1 MLJ 581; [1996] 2 MLRA 77 which laid down the proposition that “exercises of judicial discretion are not judicial precedent because they are only authority for the facts of the particular case”. [10] This Court was urged to not lose sight of the provision in Order 28 rule 4 of the Rules of Court 2012 when it considers an application under Order 28 rule 8. Foremost in the court’s deliberation would be how it may implement the best-adapted way to secure a just, expeditious and economical disposal of the case. [11] The stand taken by the Plaintiff was that this oppression action did not involve any substantial disputes as to facts. The Plaintiff further cited WTWT Sdn Bhd v Chew Meu Jong & Ors and another appeal [2018] AMEJ 1171; [2018] CLJU 1458; [2018] MLJU 1360; [2018] MLRHU 1136 for the proposition that the availability of contemporaneous undisputed documents, as in the present case, triumph over a party’s assertion or version in an affidavit. [12] The case of Ho Yaw Ming v Ho Yau Hong & Ors [2021] AMEJ 1788; [2021] CLJU 1915; [2021] MLJU 2271; [2021] MLRHU 1801 was also referred to this Court where the court stressed that a court “must not allow itself to be distracted by the multiple issues raised” and be drawn away from the issues upon which the action is based on. In this regard, the Plaintiff submitted that the issues in the main action for this Court to determine are: • Whether the Defendants have issued the Notice on behalf of the First Defendant company which has oppressed the Plaintiff; • Whether the Defendants have started the Business under the name of WS Weng Soon Electrical Supply (“the Business”) that resembles the name of the First Defendant Company and has been conducting business of the same nature which has oppressed the Plaintiff; • Whether the Defendants have abused their positions directors of the First Defendant Company to issue invoices in favourable credit terms and price to the Business which has caused losses to the First Defendant Company and oppressed the Plaintiff; • Whether the Defendants have amended invoices belonging to the First Defendant Company issued to the its customers and hence causing losses to the First Defendant Company and resulting in oppression of the Plaintiff; and • Whether the Second Defendant has conspired with the Third Defendant in performing the acts of causing losses to the First Defendant Company, hence oppressing the Plaintiff. The Applicable Law and the Guiding Principles [13] Order 88 rule 2 of the Rules of Court 2012 reads as follows: Proceedings (O. 88, r. 2)

Except for the proceedings specified in Appendix C relating to the winding up of companies and capital reduction under the Act, proceedings under the Act shall be commenced by originating summons. [14] Although the interpretation provision in Order 88 rule 1 states that “In this Order, “the Act” means the Companies Act 1965 [Act 125]”, it should not be read as the Companies Act 2016 [Act 777]. [15] In line with the dictates of the above provisions, the Plaintiff in its oppression action had commenced the action by way of Originating Summons. [16] Be that as it may, it is indisputable that the Courts are conferred with the discretion to deal with an application for conversion of an Originating Summons proceedings into a Arit action and make the necessary order if “it appears to the Court … that the proceedings should for any reason be continued as if the cause or matter had been begun by writ”. [17] Order 28 rules 4 and 8 of the Rules of Court 2012 provide as follows: Directions by Court (O. 28, r. 4)

4.

…

Unless on the first hearing of an originating summons the Court disposes of the originating summons altogether or orders the cause or matter begun by it to be transferred to a Subordinate Court or makes an order under rule 8, the Court shall give such directions as to the further conduct of the proceedings as it thinks best adapted to secure the just, expeditious and economical disposal thereof.

Without prejudice to the generality of paragraph (2), the Court shall, at as early a stage of the proceedings on the originating summons as appears to it to be practicable, consider whether there is or may be a dispute as to fact and whether the just, expeditious and economical disposal of the proceedings can accordingly best be secured by hearing the originating summons on oral evidence or mainly on oral evidence and, if it thinks fit, may order that no further evidence shall be filed and that the originating summons shall be heard on oral evidence or partly on oral evidence and partly on affidavit evidence, with or without cross-examination of any of the deponents, as it may direct.

Without prejudice to the generality of paragraph (2), and subject to paragraph (3), the Court may give directions as to the filing of evidence and as to the attendance of deponents for cross-examination and any other directions. Continuation of proceedings as if cause or matter begun by writ (O 28 r 8)

Where, in the case of a cause or matter begun by originating summons, it appears to the Court at any stage of the proceedings that the proceedings should for any reason be continued as if the cause or matter had been begun by writ, it may order the proceedings to continue as if the cause or matter had been so begun and may, in particular, order that pleadings shall be delivered or that any affidavits shall stand as pleadings, with or without liberty to any of the parties to add thereto or to apply for particulars thereof.

Where the Court decides to make such an order referred to in rule

(1), Order 34 shall apply with the necessary modifications.

This rule applies notwithstanding that the cause or matter in question could not have been begun by writ.

Any reference in these Rules to an action begun by writ shall, unless the context otherwise requires, be construed as including a reference to a cause or matter proceedings in which are ordered under this rule to continue as if the cause or matter had been so begun. [18] Commenting on the standard of proof in such an application, the editors of the of Malaysian Civil Procedure 2021 opined at para 28/8/1B that the phrase “it appears to the Court” in Order 28 r 8(1) denotes a lesser degree of probability than normally required in terms of proving a particular assertion. [19] The seminal case on Order 28 rule 8 of the Rules of Court 2012 is indeed Ting Ling Kiew. The Decision of this Court [20] As Ting Ling Kiew is a decision of the apex court, the principle articulated in that case must be understood and followed. What was enunciated in Ting Ling Kiew is that, in an appropriate case, it will be within a court’s power and absolute discretion to invoke Order 28 rule 8. Whether a given case is one that is an appropriate case or otherwise for Order 28 rule 8 to be invoked is dependent on the factual matrix of the case. In Ting Ling Kiew, the Supreme Court concluded that the factual matrix in that case justified and warranted the invocation of Order 28 rule 8 of the Rules of Court 2012. Ultimately, it is for the court that is considering an application for conversion, such as in the present case, to examine and weigh the arguments advanced by the parties and decide accordingly. [21] Ting Ling Kiew is not a blanket authority to support every application for converting an Originating Summons to a Writ action. [22] This Court is more swayed and compelled by the reasonings of the High Court in Mohamed Zahid Yon bin Mohamed Fuad v Yakub bin Hussaini & Anor [2019] AMEJ 1594; [2019] CLJU 1669; [2019] MLJU 1286; [2019] MLRHU 1279 (“Mohamed Zahid Yon bin Mohamed Fuad”). [23] For a start, like the present case, the main application in Mohamed Zahid Yon bin Mohamed Fuad was made pursuant to section 346 of the Companies Act 2016 for certain remedies in respect of allegations of oppression. Similar to the present case, the originating process adopted was pursuant to Order 7 of the Rules of Court 2012 as prescribed under Order 88, that is, by way of an originating summons. Analogous to the present case, the Second Defendant in Mohamed Zahid Yon bin Mohamed Fuad also sought to invoke Order 28 rule 8 of the Rules of Court 2012. [24] In fairness, one dissimilarity between Mohamed Zahid Yon bin Mohamed Fuad should be highlighted. Unlike in the present case, the application for conversion in Mohamed Zahid Yon bin Mohamed Fuad was made well after a hearing date for the Originating Summons had been given and merely a day before the hearing date fixed. Except for the fact that both Mohamed Zahid Yon bin Mohamed Fuad and the present case are oppression actions under section 346 of the Companies Act 2016, the facts that allegedly gave rise to the actions in both cases are different. [25] Be that as it may, what was articulately outlined and explained by Daryll Goon J (as his Lordship then was) in Mohamed Zahid Yon bin Mohamed Fuad warrants reiteration. The relevant observations are as follows: [17] If what concerned the applicant, as deposed to in its affidavit, were disputed matters set out in affidavits filed by the Plaintiff, then Order 28 Rule 4 of the ROC should be invoked for leave to cross-examine the deponent. There was no need to convert the whole process into a writ action just to be able to cross-examine a deponent on his affidavit. [18] The powers of the Court under Order 28 Rule 4 are very wide as can be seen provided in paragraphs (3) and (4): … [19] In a modern day trial where witness statements are used, there is practically no difference between the cross-examination of a witness on his witness statement in a writ action and the cross-examination of a deponent on his affidavit in proceedings commenced by way of an originating summons. If indeed the originating summons were to be continued as if it was commenced by way of a writ, all witnesses would have to tender oral evidence when what may be required is merely the cross-examination of only certain deponents on their affidavits. This, again, would not contribute to an expeditious and economical disposal of the action. … [24] As a matter of practice, Order 88 of the ROC is currently being used by litigants in our Courts as the only source of adjectival law for proceedings under the Companies Act 2016. [25] Order 88 Rule 2 states specifically that all proceedings under the Companies Act 1965, other than those specified in Appendix C to the ROC relating to the winding up of companies and capital reduction, “…shall be commenced by originating summons”. Appendix C, which was amended in 2018 (PU(A)24/18 of 1st March 2018) does, interestingly enough, make reference to the Companies Act 2016. Proceedings brought under section 181 of the Companies Act 1965 in cases of alleged oppression, and now under section 346 of the Companies Act 2016, do not fall within Appendix C and are therefore to be commenced by way of originating summons. [26] As Order 88 is a specific provision catering for proceedings under the Companies Act, it is my view that Courts should be slow to exercise its discretion under the general provision found in Order 28 Rule 8 of the ROC to treat or continue proceedings that are specifically required to be commenced by originating summons, as if it was begun by way of a writ. Courts should only do so if it is necessary to ensure a just disposal of the action. [26] The points raised by the Second and Third Defendants are valid but these are "inherent" in oppression actions. The interests of the Defendants, or for that matter all parties, can sufficiently be protected through the cross-examination of the deponents. [27] The High Court in Mohamed Zahid Yon bin Mohamed Fuad did qualify its remarks made in that case by adding as follows: [27] It may be quite different if there was a need to subpoena unwilling witnesses from whom affidavits cannot be secured. If that be the case, and the testimony of such witnesses are relevant, it may well warrant continuing the originating summons as if it were begun by way of a writ. Such, however, was not the problem in the present case. [28] This was precisely one of the grounds raised by the Second and the Third Defendants in the present case, that there is a need to have third party witnesses to testify. On this point, this Court is of the considered view that the issues presented in this oppression action can be determined without the need for these “third parties” to testify at a trial. [29] In the circumstances, the Second and Third Defendants’ application in Enclosure 34 is dismissed with costs in the cause. [30] Upon the dismissal of Enclosure 34, the Plaintiff made an oral application before me to file further affidavit and this was not objected by the Defendants. I henceforth allowed the Plaintiff’s application, with liberty for the Defendants to file their Affidavit in Reply and for parties to cross-examine the deponents if the parties deem that as necessary. Dated: 10 May, 2024 sgd [CHOONG YEOW CHOY] Judicial Commissioner High Court of Malaya Shah Alam Counsel: Mun Gin Fai for the Plaintiff (Messrs. Ze Yi & Kee) Steven Lee with Wilson Lim for the Second and Third Defendants (Messrs. Lee Khim Huei & Partners)