Datuk Kasi A/L K.L Palaniappan v 1. ) Menara Embun Sdn Bhd & 4 Lg (WA-24NCC-410-09/2017 & WA-24NCC-411-09/2017)

MENARA EMBUN SDN BHD (Company No.: 428618-M)

TAN SRI DATUK HAJI MUSTAPHA KAMAL BIN HAJI ABU BAKAR (NRIC No.: 490318-08-5599)

FELINA BINTI TAN SRI DATUK HAJI MUSTAPHA KAMAL (NRIC No.: 701201-10-6138)

MKN HOLDINGS SDN BHD (Company No.: 91625-P)

SETIA HARUMAN SDN BHD (Company No.: 425145-U) … RESPONDENTS 2 IN THE HIGH COURT OF MALAYA AT KUALA LUMPUR (COMMERCIAL DIVISION) ORIGINATING SUMMONS NO.: WA-24NCC-411-09/2017 In the matter of Modern Eden Sdn Bhd (Company No. 623037-H) And In the matter of Section 346 of the Companies Act, 2016 And In the matter of Order 7 of the Rules of Court 2012 BETWEEN DATUK KASI A/L K.L. PALANIAPPAN (NRIC No.: 581025-10-6855) … PLAINTIFF

MODERN EDEN SDN BHD (Company No.: 623037-H)

TAN SRI DATUK HAJI MUSTAPHA KAMAL BIN HAJI ABU BAKAR (NRIC No.: 490318-08-5599)

FELINA BINTI TAN SRI DATUK HAJI MUSTAPHA KAMAL (NRIC No.: 701201-10-6138)

MKN HOLDINGS SDN BHD (Company No.: 91625-P)

SETIA HARUMAN SDN BHD (Company No.: 425145-U) … RESPONDENTS 3

This judgment concerns 2 suits – Originating Summons No. WA 24-NCC-410-09/2017 (OS 410) and Originating Summons No. WA-24 NCC-411-09/2017 (OS 411). OS 410 and OS 411 were filed by the same Plaintiff pursuant to section 346 of the Companies Act 2016. The facts surrounding both the Originating Summons relate to similar series of facts.

The Plaintiff has filed 2 separate applications to convert the 2 Originating Summons into writ actions. I have allowed the applications. These are the full reasons for my decision.

In OS 410, the parties are as follows: a) the Plaintiff is Datuk Kasi a/l K.L Palaniappan (DK); b) the Defendants are: 4 i) the 1st Defendant is Modern Eden Sdn Bhd (“Modern Eden”) ii) the 2nd Defendant is Tan Sri Datuk Haji Mustapha Kamal Bin Haji Abu Bakar (“TS MK”); iii) the 3rd Defendant is Felina Binti Tan Sri Datuk Haji Mustapha Kamal (“Felina”) who is TS MK’s daughter; iv) the 4th Defendant is MKN Holdings Sdn Bhd (“MKN Holdings”); and v) the 5th Defendant is Setia Haruman Sdn Bhd (“Setia Haruman”).

The relief sought by DK in OS 410, among others, are: a) declaration that the 2nd to the 4th Defendants respectively had managed and conducted the affairs of the 1st Defendant, Modern Eden Sdn Bhd (Company No. 623037-H) (“Company”) and/or exercised their powers oppressively and/or disregarded and/or acted in a mean unfairly prejudicial to the interest of the Plaintiff as a member of the company; 5 b) an order that the 2nd to 4th Defendants do jointly and/or severally purchase the 2 ordinary shares of the company owner or held by the Plaintiff at such price and on such terms as shall be determined by the Honourable Court; c) the costs of and costs occasioned by the Originating Summons herein be borne personally by the 2nd to the 4th Defendants, jointly and/or severally, and paid to the Plaintiff on an indemnity basis or on any basis deemed fit and proper by the Honourable Court.

In OS 411, the parties are: a) the Plaintiff is also DK; b) the Defendants named are: i) Menara Embun Sdn Bhd (“Menara Embun”) as the 1st Defendant; ii) TS MK as the 2nd Defendant; iii) Felina as the 3rd Defendant; iv) MKN Holdings as the 4th Defendant; and 6 v) Setia Haruman as the 5th Defendant.

The relief sought by DK in OS 411, among others, are: a) a declaration that the 2nd to the 4th Defendants respectively had managed and conducted the affairs of the 1st Defendant, Modern Eden Sdn Bhd (Company No. 428618-M) (“Company”) and/or exercised their powers oppressively and/or disregarded and/or acted in a mean unfairly prejudicial to the interest of the Plaintiff as a member of the company; b) an order that the 2nd to 4th Defendants do jointly and/or severally purchase the 105,000 ordinary shares of the company owned or held by the Plaintiff at such price and on such terms as shall be determined by the Honourable Court; and c) the costs of and costs occasioned by the Originating Summons herein be borne personally by the 2nd to the 4th Defendants, jointly and/or severally, and paid to the Plaintiff 7 on an indemnity basis or on any basis deemed fit and proper by the Honourable Court.

Menara Embun has a total issued share capital of RM300,000.00. TSMK holds 65% stake in Menara Embun whereas DK held the remaining 35% stake.

Modern Eden has a total issued share capital of RM5.00 and TSMK holds 3 ordinary shares (a 60% stake) whereas DK held the remaining 2 ordinary shares (a 40% stake).

TSMK and DK were the only 2 directors of Menara Embun and Modern Eden until 1.12.2008 when TMSK’s daughter Felina, was appointed to the board of the 2 companies.

Menara Embun and Modern Eden were vehicles used by TSMK and DK for their joint participation in Setia Haruman and by extension, their participation in the Cyberjaya project. 8

Setia Haruman was a company incorporated on 28.3.1997 to carry out the business of township development, project development and sale of land. The specific project undertaken by Setia Haruman was the Cyberjaya project.

Setia Haruman’s total issued share capital amounted to RM6 million comprising 6,000,000 ordinary shares and the shareholders were as follows: a) Menara Embun holding 1,500,000 ordinary shares, 25% equity; b) UEM holding 1,500,000 ordinary shares, 25% equity; c) Virtual Path Sdn Bhd (“Virtual Path”) holding 1,500,000 ordinary shares, 25% equity; d) Modern Eden holding 750,000 ordinary shares, 12.5% equity; and 9 e) Impressive Circuit Sdn Bhd (“Impressive Circuit”) holding 750,000 ordinary shares, 12.5% equity.

Virtual Path was a company controlled and owned by TSMK whereas Impressive Circuit was owned and controlled by DK and his wife.

UEM is a public company and a wholly owned subsidiary of UEM Sunrise Berhad. UEM was formerly known as Renong Berhad until 10.12.2003 when the name was changed to UEM Land Berhad.

TSMK and DK had known each other since about 1981 and had formed various companies together, including Menara Embun and Modern Eden. It is alleged by DK that the two of them had a personal relationship premised on mutual trust and confidence.

In particular, according to DK: a) both TMSK and DK would jointly manage their business ventures; 10 b) TSMK was always the Executive Chairman and chaired the board meetings as he was the face of these ventures, given that he was and remained a better known name in the property sector; c) DK was always the Executive Director and Chairman of the Executive Committee (“EXCO”) that raised key matters for board decisions and that implemented board decisions; d) DK also took the lead and spearheaded business strategy and all corporate and financial matters and addressed technical issues as and when they arose; and e) The profits would be shared mainly between TSMK and DK, and hence both of them were also shareholders, in person or via their nominees, as the case may be, in all such business ventures undertaken together, with TSMK holding the majority shareholding and DK the remainder and/or the minority shareholding. 11

DK referred to the above alleged relationship as “the Understanding”.

In the case of Setia Haruman, DK alleged that there was joint control of that company by TSMK and him by virtue of the 75% equity held by their joint vehicles, Menara Embun and Modern Eden as well as their personal vehicles, Virtual Path and Impressive Circuit. In this regard, TSMK effectively held 48.75% equity of Setia Haruman and DK effectively held 26.25% equity in Setia Haruman with UEM holding the remaining 25% equity.

DK alleged that there was an understanding at Setia Haruman that TSMK could appoint 4 nominees to the board of directors while both UEM and DK were accorded 2 nominees each. DK referred to this as the “New Board Understanding”.

As a result thereof: a) despite several board changes, the changes were in tandem with the aforesaid New Board Understanding; and 12 b) DK together with his nominee, Balasingam a/l Govindan (“Balasingam”), were appointed to the board of Setia Haruman. Both Balasingam and DK were always re-elected as directors of Setia Haruman.

In breach of the said Understanding and/or New Board Understanding and/or DK’s legitimate expectation it was alleged by him that: a) TSMK and TSMK’s nominees to the board of Setia Haruman, together with the remaining members of Setia Haruman failed or refused to appoint DK’s nominee to replace Balasingam who had resigned; and b) nominees of TSMK and UEM had also excluded DK from participating in the management of Setia Haruman by refusing to re-elect him as a director of Setia Haruman, until the matters complained of herein.

The allegedly oppressive acts were said to be in breach of the Understanding and the New Board Understanding. 13

The Defendants deny the Understanding and the New Board Understanding.

In July 2018, the Plaintiff filed 2 applications to convert the 2 Originating Summons to a writ on the grounds that his claims were premised upon, amongst others, the Understanding and the New Board Understanding, in respect of which there were material disputes of fact. The Plaintiff alleged that the material facts were inappropriate to be decided summarily by the Court by relying simply on affidavit evidence and that the affidavits filed by the parties disclosed disputes of fact that required inquiry through a full trial.

The Defendants contended that it is not every dispute of fact which calls for a writ action. The Plaintiff could have filed a writ action but chose to file an Originating Summons instead. The Plaintiff delayed in filing the conversion application and, even if there are disputes of fact concerning the Understanding and the New Board Understanding, the deponents of affidavits could be subject to cross examination if appropriate. 14

These conversion applications were made pursuant to Order 28 rule 8 of the Rules of Court 2012 which reads as follows: “8. 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 15 or matter proceedings in which are ordered under this rule to continue as if the cause or matter had been so begun”.

I am in agreement with the submission of the Plaintiff that pursuant to Order 88 rule 2 of the Rules of Court 2012, an application pursuant to section 346 of the Companies Act 2016 shall be filed by way of an Originating Summons. Order 88 rule 2 provides that except for the proceedings specified in Appendix C relating to the winding up of companies and capital reduction under the Companies Act 1965, proceedings under the Act shall be commenced by originating summons. I do not agree that the reference in the Rules of Court 2012 was only to proceedings filed under the Companies Act 1965 but not the Companies Act 2016. It would be ridiculous for the provision in Order 88 rule 2 not to apply to proceedings filed under Companies Act 2016 as well. In any event section 76 of the Interpretation Acts 1948 and 1967 provides as follows: “76. Reference to re-enacted provisions Where any written law repeals and re-enacts, with or without modification, any provision of a former written law, references in any other written law to the provision so repealed shall, unless the contrary intention appears, be construed as references to the provision so re-enacted”. 16

In the case of Ng Chee Choy v Better Symbol Sdn Bhd & Ors [2013] 5 CLJ 417, non compliance with Order 88 rule 2 resulted in the Writ being struck out. This is what the Court there said: “[7] In the instant action, the plaintiff is clearly praying for remedies provided in the CA 1965 and in particular s. 181 CA 1965 for the first defendant company to be wound up. Now, O 88ROC 2012, which deals with the CA 1965, has provided in O. 88 r. 2 that except for the proceedings specified in Appendix C relating to the winding up of companies and capital reductions under the CA 1965, proceedings under the CA 1965 shall be commenced by originating summons. The defendants therefore contend that by filing a writ action instead of an originating summons, there has been substantial non-compliance of the rules. [8] The plaintiff, in response, argued that a writ action was filed as it was anticipated that triable issues would be raised. Even assuming that an originating summons had been filed, it would eventually have been converted to a writ action pursuant to O. 28 r. 8 of the ROC 2012. The plaintiff therefore contends that the time and costs have been saved by filing a writ action instead of an originating summons. … [10] Having given the matter anxious consideration, I have come to the view that the plaintiff’s submissions are not persuasive. It is significant that O 88 r 2 ROC 2012 is a mandatory provision requiring proceedings under the CA 1965 to be commenced by originating summons. 17 … [15] In the circumstances and for the reasons stated, the plaintiff ought to have commenced proceedings as mandated by O 88 r 2 ROC 2012 . By filing the writ action, it must be concluded that there has been substantial non-compliance with the ROC 2012. This defect cannot amount to a mere irregularity. … [18] In the upshot, since there was substantial non-compliance of the rules in that the wrong mode of commencement of proceedings was adopted by the plaintiff, the plaintiff’s suit is an abuse of the court process and ought to be struck out…”

Accordingly, the Plaintiff could not be faulted for not filing a writ action in the first instance. It is not too late in the day for the Plaintiff to apply for a conversion of the Originating Summons into a writ.

The Plaintiff submitted that there was no delay in this case. The 5th Defendant and the 2nd and 3rd Defendants had filed their respective applications to strike out the Originating Summons on 6.11.2017 and 22.11.2017. Pending disposal of the striking out applications, the Court had stayed the exchange of affidavits. It was only on 2.4.2018, after the Court had dismissed the striking out applications, that the Court gave 18 further directions for parties to file their affidavits in respect of the Originating Summons.

Upon realising that the Defendants are disputing the existence of the Understanding and the New Board Understanding, the Plaintiff had filed the application for conversion of the Originating Summons.

I agree with the Plaintiff that there was no inordinate delay on the part of the Plaintiff in filing these applications.

Conversion of an Originating Summons to a writ was allowed in the case of HSBC Bank Malaysia Bhd v Wong Thien Boon & Ors [2008] 6 CLJ 381 when it was found that there were conflicts of evidence on several issues and a serious dispute between the parties, which require viva voce evidence to determine the issues. “[10] Here, the learned judge had before him a serious claim by the plaintiff bank that it did not owe any monies to the defendants. The bank had produced all documents available to it given the 27 years’ lapse in the defendants making their demand. Equally, on the other hand he had before him a serious claim by the defendants that the RM21,350 was due to them. Given the material that was placed before him by way of affidavits a conflict of evidence emerged on several issues including, whether the defendants were 19 either estopped or barred in making their demand due to the operation of equitable doctrine of laches. There also appears to be a serious dispute between the parties as to whether, and if so, when limitation set in. These are matters which require full argument and mature consideration. It is also plain that viva voce evidence is necessary to determine in which direction the balance of equity would turn...”.

Similarly, in a case involving a minority oppression originating summons, the High Court in ISM Sdn Bhd v Queensway Nominees (Tempatan) Sdn Bhd & Ors [2016][ 2 CLJ 294 ordered a conversion to a writ action on the following grounds: “[16] Having noted the plaintiff’s contention in respect of the minority oppression for the OS proper, I have little doubt that it would be more prudent, economical, faster and fairer for both the plaintiff and the defendants that the case on minority oppression as a whole be disposed of by way of a writ action where witnesses are called instead of merely proceeding by way of affidavits evidence as in the normal OS. I state my reasons for saying so in the succeeding paragraphs below. [17] The nature of the case on minority oppression as alleged by the plaintiff is one where it will involve various conflicting facts or disputed facts that will be contended by both parties. These disputed facts include the question on what is the term of the JVA on shareholding since this JVA is verbal and not 20 written. Also what is the position with regard to the loan and the charging of the relevant lands. These conflicting or disputed facts would mean that it is insufficient merely to rely on affidavits evidence alone to come to the determination whether there is in fact minority oppression exercised on the plaintiff. The disputed facts would only mean that witnesses ought to be called not only to allow for their version of events to be narrated in court but more importantly for this court to make an assessment on the veracity of their oral testimony. There is nothing better than this court being able to have the opportunity to look at the demeanour of the witnesses before judging the truth of what had been testified in open court. This of course cannot be done if the case is proceeded based merely on affidavits evidence. It is also to say the least more prudence and fairer to all parties concerned including the plaintiff who opposed this application for the matter to be heard as a writ action in view of the need for witnesses to testify... [21] I am of the findings too that the allegation on minority oppression alleged by the plaintiff is also premised on oral evidence as opposed to pure documentary evidence. Since it is not largely premised on documentary evidence but also on direct oral evidence, I am of the view that this allegation be best resolved and determined by way of writ action instead of by way of OS... [22] Also to be considered is the fact that the events concerning the case of the plaintiff against the defendants spanned roughly seven years suggesting the need to carefully examine these events that occurred thus rendering it 21 best that oral evidence be heard instead of just affidavits evidence. Further these events almost entirely involved not documentary evidence but verbal exchanges between the parties indicating it would be more appropriate and fitting that this court should hear oral evidence as opposed to affidavits evidence. Although it cannot be denied that affidavits evidence would have achieved the same purpose, there should be no dispute that hearing oral evidence would do no harm to all parties in this case. After all it is only fair to suggest that under normal circumstances the same past events are perceived to happen differently to different set of people. That is precisely the more reason to allow for oral testimony to better gauge, assess and evaluate what actually happened with regard to these past events”.

This is also what was said in that case: “[19] Also it must be considered that even when a party is able to apply for cross-examination of the deponents of the affidavits of opposing parties, in this particular case that is not an expedient way to determine the crux of the dispute on minority oppression. If cross-examination is contemplated, parties will then have to apply and in all likelihood there may be arguments to oppose the application to cross-examine resulting in further time be taken and wasted instead of having this determined by oral evidence from the outset. This is not to mention the possibility of appeals against the decision to allow for cross-examination on any particular deponent of the affidavit. Thus, this is further reason to say that the conversion applied by the defendant ought to be allowed. 22 [20] Apart from that, this court is of the view there is a great possibility that third parties would have to be called in to determine the issue on minority oppression. These third parties cannot be compelled to affirm an affidavit if this matter is allowed to proceed only on affidavits evidence. However they have no options if this case proceeded as a writ action in open court for witnesses to testify as they will be obliged to attend court as they are always open to be subpoenaed. ... [23] I have also considered there is no real substance for the plaintiff to argue that the present application is merely a strategy by the defendants to delay the hearing of the OS to its conclusion. In fact I am of the contrary view that having this case heard by calling witnesses would dispose the issue of minority oppression in the OS faster, having regard to various disputed facts and the largely oral evidence as opposed to documentary evidence needed to prove the issue on minority oppression in the OS. Proceeding with the OS and having to apply for cross-examination of the deponents of the affidavits would mean taking a longer route in concluding the case instead of having witnesses ready to testify by oral testimony in open court... [24] I am also of the opinion that it would be more prudent and appropriate to have the oral hearing as allowing for the case to continue on the OS will only mean there could be several affidavits of just one deponent alone but if this case is to proceed by way of writ, than there is no requirement to file these 23 affidavits. What would be needed is to file probably just one witness statement for the each witness of the plaintiff and defendants without the need to reply affidavits back and forth”.

In this case, I note that not only are the alleged Understanding and the New Board Understanding disputed, but the Plaintiff also intends to subpoena witness(es) from UEM who is not a party to give evidence as to the existence of the New Board Understanding. That cannot be achieved by the cross examination of deponents of affidavits, as UEM did not affirm any affidavit in the proceedings. For these reasons, I am of the view that it would be appropriate to grant the conversion applications and I accordingly make orders in terms thereof. Wong Chee Lin Judicial Commissioner Kuala Lumpur High Court Dated: 26th October 2018 24 Solicitors for the Plaintiff C M Owee Messrs Owee & Ho Advocates & Solicitors D2-U2-15, Solaris Dutamas No. 1, Jalan Dutamas 1 50480 Kuala Lumpur Tel : 03-6203 7951 / 6203 7952 Fax: 03-6203 7989 Solicitors for the 2nd, 3rd and 4th Defendants Shirin Devi Pathmanathan Messrs M Pathmanathan & Co Advocates & Solicitors 2A-23A-2, Block 2A, Plaza Sentral Jalan Stesen Sentral 5 Kuala Lumpur Sentral 50470 Kuala Lumpur Tel : 03-2260 3350 Fax: 03-2260 3351 25 Solicitors for the 1st & 5th Defendant Eric Clement A/L A Sebastian Messrs ABD Halim Ushah & Associates Advocates & Solicitors No. 22, 1st Floor, Jalan Kemuja