Cj Polymers Sdn Bhd v 1. ) Kerk Han Meng (WA-22NCC-786-10/2023)

KERK HAN MENG (NRIC No.: 730320-01-5127)

SIM CHIN HU (NRIC No.: 711010-03-5081) …DEFENDANTS JUDGMENT Introduction [1] Enclosure 33 is the Plaintiff’s (“CJ Polymers”) application seeking the following prayers: a) that this present suit WA-22NCC-786 -10/2023 (“Suit 786”) be transferred to the Kuala Lumpur High Court, NCC2 hearing the Originating Summons No.: WA-24NCC-547-10/2023 (“OS 547”) and an order that OS 547 be tried and or heard after this present suit or in a manner to be decided by the Kuala Lumpur High Court, NCC2 trying or hearing OS 547 (“the Transfer Order”); b) alternatively, that Suit 786 be transferred and consolidated with the OS 547 (“the Transfer and Consolidation Order”); c) that consequential to prayer (2) above and or upon the Transfer and Consolidation Order in prayer (2) above being made, this present suit be transferred to the Kuala Lumpur High Court, NCC2 hearing OS 547. [2] After perusal of the written submissions filed by counsel and upon hearing oral submissions from counsel, I dismissed Enclosure 33 with costs. [3] In essence, I found that the application is an abuse of the Court process being a mere tactical manoeuvre and further that this is not a case where there will be a saving of costs and time to justify an order to consolidate the Suit 768 with the OS 547, which are different in nature. Background Facts [4] OS 547 was filed on 5.10.2023 and Suit 786 was filed on 27.10.2023. [5] The current parties in OS 547 and Suit 786 are as follows: OS 547 SUIT 786 Plaintiff – Kerk Han Meng (“Kerk”) Plaintiff – CJ Polymers Sdn Bhd (“the Company” or “CJ Polymers”) 1st Defendant – Lee Yu Meng (“Ainsley”) 1st Defendant – Kerk 2nd Defendant – Kua Chin Wee (“Eric”) 2nd Defendant – Sim Chin Hu (“Sim”) 3rd Defendant – Wong Kok Kheong (“Wong”) 5th Defendant – (“the Company” or “CJ Polymers”) [6] OS 547 is an oppressive action filed by Kerk, the 1st Defendant herein, premised upon his alleged unlawful removal from the management of CJ Polymers and the unlawful appointment of Wong as a director of CJ Polymers vide the purported allotment of shares to Wong sometime in 2023. The effect of the aforesaid was that Kerk’s management of the Company has been taken over by Ainsley, Eric and Wong (“the alleged Unlawful Takeover”). [7] Suit 786, on the other hand, is an action by CJ Polymers against Kerk and Sim who is the 2nd Defendant herein for alleged breach of their duties to CJ Polymers and or for alleged fraud, dishonesty and or misappropriation causing losses to the Company. [8] The reliefs sought by the parties in OS 547 and Suit 786 are as follows: OS 547 SUIT 786 The relief sought include, inter alia, the following: The relief sought include, inter alia, the following:

A declaration that Ainsley and Wong are conducting the affairs of the Company in a manner that is oppressive to and/or disregard of Kerk’s interests as a member of the

A declaration that Kerk’s removal as a director of the Company is unlawful;

A declaration that Clause 72(h) of Table A, 4th Schedule, Companies Act 1965 is inapplicable as against

A declaration that the appointment of Wong as a director of the Company is unlawful;

A declaration that the allotment of 26,000,000 shares in the Company to Wong is unlawful

An order that the Company take all necessary steps to give effect to the declarations above within 14 days from the date of the Order obtained;

Consequent to prayer 1:

An order that Ainsley do sell all her shares in the Company, and

Kerk and/or Eric do purchase and/or cause and procure A declaration that Kerk and Sim, in their capacity as directors and executive officers of the Company, have dishonestly and/ or fraudulently misappropriated the Misappropriated Sum from the Company thereby causing the Company to suffer losses;

A declaration that Kerk and Sim have acted in breach of their fiduciary duties to the Company in respect of the Sham Transactions concerning the Misappropriated Sum from the Company thereby causing losses to the Plaintiff:

Kerk and Sim do jointly and severally pay the Misappropriated Sum amounting to RM9,247,577.37 to the Company within 7 days from the date of Judgment;

Kerk and Sim do jointly and severally pay to the Company the sum of RM2,851,996.95 as pleaded in paragraph 43 of the Statement of Claim within 7 days from the date of Judgment. the purchase of the same, at a fair value to be determined by the Court and/or an independent valuer;

(ii) An order that Ainsley be removed as a director of the Company and a bank signatory of all the bank accounts of the Company;

Alternatively, an order that the Company be wound up. [9] Enclosure 33 was filed by the Company on 16.5.2024, almost 7 months after Suit 786 was filed. [10] Significantly, when CJ Polymers filed Enclosure 33 for Suit 768 to be transfer to the Kuala Lumpur High Court, NCC2: a) the Kuala Lumpur High Court NCC2 had already fixed the full hearing for OS 547 on 31.7.2024; b) the Kuala Lumpur High Court, NCC2 had removed Sim, the 2nd Defendant herein as a party in the OS 547. Sim was initially a party to OS 547; c) the pleadings in Suit 786 were closed and this Court had fixed 2.7.2024 as the hearing date for the two applications filed by Kerk to stay the proceedings in Suit 786 pending the determination of OS 547 (“Enclosure 17”) and for CJ Polymers to furnish security for Kerk’s cost in Suit 786 (“Enclosure 20”). [11] Subsequent to the filing of Enclosure 33, an application has been filed by Wong on 6.6.2024 in OS 547 to cross examine the deponents of the affidavits filed by the plaintiff’s therein and the Kuala Lumpur High Court, NCC2 in OS 547 has fixed the hearing of the application on 18.7.2024. In the meantime, the full hearing for OS 547 fixed on 31.7.2024 has been maintained. [12] CJ Polymers contended that this Court ought to grant its application under Enclosure 33 because there are common or similar issues in both OS 547 and Suit 786. More specifically, it is contended that in Suit 786, the issue is whether Kerk and Sim had caused the Company, CJ Polymers to suffer losses by virtue of certain dubious transactions. Similarly, in OS 547, it is contended that the same dubious transactions are put in issue as Kerk’s removal from the management of CJ Polymers was purportedly premised on the same. [13] Accordingly, it is contended that Suit 786 should be transferred and or consolidated with OS 547 in order to avoid inconsistent decision by 2 different courts on the same issues. Court’s Considerations [14] At the outset, it must be said that the application for the Transfer Order under prayer 1 of Enclosure 33 which sought for Suit 786 to be transferred to the Kuala Lumpur High Court NCC2 hearing the OS 547 and the further order that OS 547 be tried and or heard after Suit 786, is one that is beyond the jurisdiction of this Court to make. [15] I have had the opportunity in Koh Heng Jin Holdings Sdn Bhd & Anor v. Lee Quan Yoong & Anor [2022] MLJU 450 to consider this point. In that case, I opined that I was bound by the decision of the Court of Appeal in Kerajaan Negeri Kelantan v. Petroleum Nasional Berhad & Anor [2011] 6 CLJ 649 where the Court of Appeal expressly held that item 12 of the Schedule to Section 25(2) of the Court of Judicature Act 1964 on the powers of the High Court to transfer does not apply to the transfer from one Division of a branch of the High Court to another High Court within the same Division of the same branch. [16] Accordingly, since the Kuala Lumpur High Court NCC2 is housed within the same Division with this Court at the Kuala Lumpur branch of the High Court of Malaya, this Court has no jurisdiction to make the transfer of Suit 786 to the Kuala Lumpur High Court NCC2 as prayed for in the application for the Transfer Order. [17] In fact, the prayer for the Transfer Order seeks for something further than a mere transfer. It also asked this Court to make an order that OS 547 which is before another Court be tried and or heard after this present suit. In other words, the prayer is for this High Court to give directions to a fellow High Court as to the future conduct of the two cases once Suit 786 is transferred to the Kuala Lumpur High Court NCC2. [18] In Selinsing Mining Sdn Bhd v Selinsing Gold Mine Manager Sdn Bhd & Ors [2017] 10 MLJ 97, Ahmad Nasfy J held that the High Court is not clothed with the power to give such further order under Court of Judicature Act 1964 once a suit has been transferred to another court of concurrent jurisdiction. “[26] It must be stressed at this point that the power of transfer cannot be equated with the power to order consolidation of the suits. It is in this context that one may appreciate the plaintiff’s argument as canvassed above; that way in which encl 228 is couched showed that the application for ‘transfer’ is lumped together with consolidation. Thus by seeking a further order that this present suit to be heard only after the said Kuantan Suit has been disposed of, the application lacked bona fide and according to the plaintiff ‘ultra vires’ the power stated in para 12 above. [27] In my judgment and at the risk of repetition para 12 of the Schedule to the CJA clearly revealed that in the case of a transfer to or from two High Court of concurrent jurisdiction, one High Court can only effect a transfer of proceedings. It cannot give any direction as to the future conduct thereof. [28] In this case the defendants sought an order that this High Court give directions to a fellow High Court as to the future conduct thereof, namely, first to consolidate this case with the Kuantan Suit; and secondly to direct that this case be heard after the Kuantan Suit. From what I have stated above the orders sought by the defendants are beyond the scope of the powers exercisable by this court. In follows therefore that if the court were to accede to the application the court will be acting ‘ultra vires’ its power. Hence on this basis the application is misconceived and must stand dismissed. Still on this point I wish to further state that the defendant cannot, in my view, seek to read para 12 together with O 4 of the ROC to lend support its argument that both provisions confers power and jurisdiction to the High Court to make the order as applied in encl 228. That argument, in my considered view, is erroneous as the provisions of the ROC 2012 cannot be used as a basis to confer power when clearly the power is not available and that the ROC is merely a governing procedure and not the source of substantive power — see Hap Seng Plantations (River Estates) Sdn Bhd v Excess Interpoint Sdn Bhd & Anor [2016] 3 MLJ 553; [2016] 4 CLJ 641” [19] For the above reasons, the prayer 1 of Enclosure 33 is wholly without any merits. [20] In fact, it seems to me that learned counsel for CJ Polymers were clearly aware of the jurisdictional impediments to the application for the Transfer Order. This is because Enclosure 33 also prayed for the alternative that Suit 786 be consolidated with OS 547 and for Suit 786 to be transferred to Kuala Lumpur High Court NCC2

some common question of law or fact arises in both or all of them;

the rights to relief claimed therein are in respect of or arise out of the same transaction or series of transactions; or

for some other reason it is desirable to make an order under this rule, the Court may order the causes or matters to be consolidated on such terms as it thinks just or may order the causes or matters to be tried at the same time or one immediately after another or may order any of the causes or matters to be stayed until after the determination of any other of the causes or matters.” [24] In Central Securities (Holdings) Bhd v. Haron bin Mohamed Zaid [1979] 2 MLJ 244, the Federal Court held that: “The main purpose of consolidation is to save costs and time, and therefore it will not usually be ordered unless there is ‘some common question of law or fact bearing sufficient importance in proportion to the rest’ of the subject-matter of the actions ‘to render it desirable that the whole should be disposed of at the same time’ (Payne v British Time Recorder Co., Horwood v British Statesman Publishing Co., Ltd., Daws v Daily Sketch). Where this is the case, actions may be consolidated where the plaintiffs are the same and the defendants are the same. We may add that in such circumstances, one of the tests in deciding whether consolidation should be ordered is to determine whether two inconsistent judgments will come into existence if it is not ordered.” [25] It is this fear that two inconsistent judgments may be reached if no consolidation order is made that is relied upon in support of Enclosure 33. [26] With respect to learned counsel for CJ Polymers, I am not persuaded that this is an appropriate case for an order to be made for Suit 786 to be consolidated with OS 547. [27] To begin, OS 547 is already at an advance stage. It is fixed for full hearing on 31.7.2024 which is just less than 1 month away. On the other hand, Suit 786 has yet to be set down for trial. Although pleadings have closed, the parties have yet to comply with pre-trial directions and trial dates have not yet been fixed. There are still pending at least 2 interlocutory applications, namely Enclosures 16 and 20 which are filed by Kerk. In fact, Enclosure 16 is an application for Suit 768 to be stayed pending the hearing of OS 547, which is diametrically opposed to Enclosure 33. [28] If Suit 786 were to be consolidated with OS 547, it will certainly result in a delay to the hearing of OS 547. In this regard, although learned counsel for CJ Polymers had informed this Court that the hearing of OS 547 fixed on 31.7.2024 may be postponed due to the application made to cross examine the deponents of affidavits filed in the proceedings thereto, this is just a mere possibility and not a certainty as the learned judge has fixed the hearing for leave to cross examination on 18.7.2024. In doing so, the learned judge has expressly maintained the hearing of the OS 547 on 31.7.2024. [29] In any case, even if the OS 547 were to be postponed, the fact remains that OS 547 is ready for hearing and the new date will not be too far away. On the other hand, if Suit 786 were to be consolidated with OS 547, it will definitely disrupt the prompt hearing of OS 547. Being an application by Originating Summons, by its very nature, OS 547 is intended to be disposed of more expeditiously than a writ action. [30] Indeed, to my mind, there is force in the contention by learned counsel for Sim and Kerk that the application to consolidate and to transfer the Suit 786 to Kuala Lumpur High Court NCC2 under Enclosure 33 is nothing more than a ‘tactical’ or ‘strategic’ manoeuvre. [31] Firstly, although CJ Polymers filed Suit 786 on 27.10.2023, it did not file any application for consolidation with OS 547, which was filed on 5.7.2923 until sometime on 16.5.2024. This was only after the full hearing for OS 547 had been fixed on 31.7.2024 and after Enclosure 16 was filed by Kerk in this action. No explanation was given for the delay. [32] Secondly, Enclosure 33 was only filed after it was made clear by Kerk in Suit 786 that in the event his oppression action in OS 547 succeeds, he will cause the Company, CJ Polymers to withdraw the Suit 786 as he contends that this action has been taken without authority of the Company. Accordingly, it serves the interest of the defendants in OS 547 to ‘delay’ the hearing of the OS 547 until Suit 786 is heard. [33] Thirdly, although the premise of the application for consolidation is that there exists a commonality of issues between both OS 547 and Suit 786 and by reason thereof, there is a need to avoid inconsistent findings by the Courts, the prayer sought for in Enclosure 33 was not for both OS 547 and Suit 786 to be heard together, instead, the application expressly sought for Suit 786 to be heard first before OS 547 even though OS 547 was filed first in time. This belies the true motivation for the application. [34] Accordingly, it is my judgment that Enclosure 33 was not made bona fide but with a view to derive a tactical advantage over the defendants in Suit 786. To my mind, this alone is sufficient to dismiss the application which is nothing more than an abuse of the court process. [35] In any case, it is also my judgment that there is no legal basis for consolidation of both the Suit 786 and OS 547 because the nature of both the actions is different and distinct. The OS 547 proceeds by way of affidavits and does not require oral evidence adduced at a trial. It can be determined fairly quickly. This is distinct from the writ action in Suit 786 where oral testimony will need to be adduced. There will be no saving of time and costs by consolidating the two actions. The OS action can be and ought to be pursued independently of the writ action. This is notwithstanding the pending application for cross examination of the deponents of affidavits. There are no provisions for exchange of documents and subpoena of witnesses in the Originating Summons process. [36] Indeed, the present case is similar to the facts in Ng Joo Soon @ Nga Ju Soon v Dovechem Holdings (M) Sdn Bhd & Ors [2010] 1 LNS 1677 where the Court was faced with an application to transfer and consolidate a shareholder oppression petition with a writ action. In dismissing the said application to transfer, the Court, inter alia, held: “9. The next factor that weighed in my mind was the fact that the two proceedings are distinct and different. This Petition is a special statutory right of action afforded to all minority shareholders under section 181 of the Companies Act 1965 in order to protect their rights and interests. This right is one enjoyed by virtue of the relationship of the Petitioner with the Respondents...

By way of contrast, the Shah Alam Suit is a writ action where oral testimony is generally adduced at trial as opposed to the use of affidavits in petitions … ..

… These different issues under consideration in the Shah Alam Suit make it unsuitable and undesirable that this specific and limited right of action be transferred to Shah Alam, be consolidated and be heard concurrently with that suit” [37] Furthermore, the reliefs and the parties in both the proceedings are different as I have outlined above. Thus, there are no commonality of reliefs and parties. [38] As regards the ‘common issue’, I agree with learned counsel for Sim that in OS 547 that the dubious transactions which are raised by the defendants therein, even if established by the defendants, could at best provides “justification” for removing Kerk from the management of the Company but the same can have no bearing to the issue of the alleged Unlawful Takeover of the company through the appointment of Wong as a director and the allotment of new shares to him. [39] What this means is that the Court in OS 547 does not need to determine the issues in respect of the dubious transactions in order to decide whether or not the appointment of Wong as a director and the allotment of shares to him was valid and lawful and amounting to conduct oppressive of Kerk at all. In fact, Kerk’s position as the plaintiff in OS 547 is that these issues, even if true, do not in law justify any of the steps taken to perpetrate the alleged Unlawful Takeover. Accordingly, there is in fact no common issue between OS 547 and Suit 786. [40] In any event, even if it is necessary to determine the issue of breach of fiduciary duties by Kerk and Sim in the OS 547, it is my judgment that given the lack of bona fide in the application by PJ Polymers in this case, the difference in the nature of the 2 actions, namely, one being a Writ action whilst the other is an Originating Summons, the dissimilarity in the reliefs and the fact that the parties in both the actions are not identical and the further the fact that the OS 547 is already at its full hearing stage, it is my judgment that this is certainly not an appropriate case for consolidation of the Suit 786 with OS 547. There will be no saving of costs and time at all. Conclusion [41] For the reasons above, Enclosure 33 is dismissed with costs fixed at RM 5,000.00 payable to each of the Defendants herein subject to the payment of allocator. Dated the 10th day of July 2024 ONG CHEE KWAN Judge of the High Court of Malaya High Court of Kuala Lumpur, NCC2 & Admiralty Counsel:

Dato' K Kiruba Karan A/L T Karthigasu with Mr. John Wong Yok Hon and Ms. Chong Kah Yee for Plaintiff for Plaintiff

Mr. Dato' Shamesh A/L Jeevaretnam with Mr. Kumarappan A/L Ramasamy & Siow Pey Yiaw for 1st Defendant

Mr. Brendan Navin Siva with Ms. Aida Haryani Binti Salamon for 2nd

Koh Heng Jin Holdings Sdn Bhd & Anor v. Lee Quan Yoong & Anor [2022] MLJU 450 2. Kerajaan Negeri Kelantan v. Petroleum Nasional Berhad & Anor [2011] 6 CLJ 649 3. Selinsing Mining Sdn Bhd v Selinsing Gold Mine Manager Sdn Bhd & Ors [2017] 10 MLJ 97 4. Central Securities (Holdings) Bhd v. Haron bin Mohamed Zaid [1979] 2 MLJ 244 5. Ng Joo Soon @ Nga Ju Soon v Dovechem Holdings (M) Sdn Bhd & Ors [2010] 1 LNS 1677

Item 12 of the Schedule to Section 25(2) of the Court of Judicature Act 1964 2. Order 4 rule 1 of the Rules of Court, 2012