Dinding Development Sdn Bhd (Dalam Likuidasi) v CITYVILLA CONSTRUCTION SDN BHD (JA-24NCvC-1064-09/2023)

This Originating Summon application (hereafter refers to as “OS application”) was filed by Mr. Bala Subramaniam the liquidator to the company Dinding Development Sdn Bhd (hereafter refers to as “DDSB”), seeking for a series of relief as follows: i. a declaration order against the 1st Defendant that the Order entered against the 1st Defendant in JA-22NCVC-8-01-2018 has a binding effect on the 2nd, 3rd and 4th Defendant; ii. a declaratory order that the JID order entered against the 2nd, 3rd and 4th Defendant on 31.7.2018 is invalid and void; iii. an injunction against CCSB, its representatives, agents, nominees, employees or otherwise of the Defendant to prohibit from selling, transfer, mortgaging, assigning, countering and/or rehabilitating and/or entering into a transaction and/or dealing related to Block A Plaza Mentari (Sun City) Project held under Title PN 9501 Lot 63471 Mukim Pletong, Daerah Johor Bharu until the final disposal of the suits by the purchasers in JA-22NCVC-79-07/2020, JA- 22NCVC-82-07/2020, JA-22NCVC-83-07/2020, JA-22NCVC- 84-07/2020 and Respondent’s appeal in J-02(NCVC)(W)- 2070-11/2-022; iv. to restrain Jabatan Perumahan Negara (JPN) from intervening and/or making decisions and/or giving instructions and/or S/N nkhSF4mIIkyn8foFiWxUaA **Note : Serial number will be used to verify the originality of this document via eFILING portal 3 advising and/or issuing and/or renewing Developer Licenses to any party until the disposal of the said suits above by the buyers; v. A restraining order against the Johor Bahru Municipal Council (Majlis Perbandaran Johor Bharu) from intervening with and/or making decisions and/or giving instructions and/or giving advice to any parties until the disposal of the said suits by the buyers.

The applicant company in this present OS is the 1st Defendant in suit JA-22NCVC-8-01-2018 whilst the 2nd, 3rd and 4th Defendant also in suit JA-22NCVC-8-01-2018 are directors of the 1st Defendant when a Joint Venture Agreement (JVA) was signed on 3.8.2012 between the Plaintiff (CCSB) and 1st Defendant (DDSB). The 5th Defendant a law firm had acted for the Plaintiff in preparing a Power of Attorney dated 29.4.2013 which was agreed by the Plaintiff as per clause 11 of the JVA authorizing the 1st Defendant to act as attorney towards realization of the development (as para 3 of this judgment below) in return for payment of the outstanding sum of RM2,207,176.00 as indicated in clause 4.4.5 of the JVA. The history [3] CCSB had obtained a Facility Agreement with Malaysia Building Society Berhad (MBSB) in the form of a financial guarantee amounting to RM20,000,000.00 and a Bridging Loan facility of RM13,000,000.00 on 13.12.2006 and 14.12.2006 respectively. On 3.8.2012, the said JVA was signed between parties where CCSB agreed to transfer to DDSB all its rights, interests and benefits in the development of Block A, Plaza Mentari (Sun City) Project held under Title PN 9501 Lot 63471 Mukim Pletong, S/N nkhSF4mIIkyn8foFiWxUaA **Note : Serial number will be used to verify the originality of this document via eFILING portal 4 Daerah Johor Bharu that sees DDSB, in return agreeing to take over all CCSB’s liabilities of the debt with MBSB for the Sun City project.

This means the debt will be assigned and transferred to DDSB and was in fact transferred as facilitated by a tripartite Novation Agreement signed between MBSB, CCSB and DDSB on 21.9.2012. Arising from this agreement, CCSB executed the first 3rd party charge on the said project in favor of MBSB as security towards DDSB’s settlement of the said loan to MBSB.

DDSB had carried out the development of the said project followed with the sale of 79 units in the said project. With the sales of the 79 units being completed, the purchasers sought for the redemption of the said units from MBSB. A discharge of charge followed for these units upon successful settlement of the redemption sum by the purchasers to MBSB.

CCSB subsequently, initiated an action against DDSB by filing a suit number JA-22NCVC-77-04/2016 seeking for a declaration that the Power of Attorney dated 29.4.2013 be declared as null and void, commencing from 29.4.2013. DDSB however was declared wound up by the Johore Bharu High Court on 30.1.2018, via suit no JA-28NCC-207-11/2017 initiated by petitioner Kenyin Hardware Sdn Bhd.

This moved MBSB to intervene in the 1st suit between CCSB and DDSB. On 11.1.2018 however, CCSB initiated a second action for a similar claim via suit number JA-22NCVC-8-01/2018 against DDSB adding the 2nd to 5th Defendants as parties. MBSB however was not made aware of this 2nd suit. The 1st suit was then withdrawn on 18.9.2018. S/N nkhSF4mIIkyn8foFiWxUaA **Note : Serial number will be used to verify the originality of this document via eFILING portal 5

A judgment in default was recorded against DDSB, Defendant 2 to Defendant 4 on 31.7.2018 in suit JA-22NCVC-8-01/2018 with a declaration order that the JVA and the POA declared void and a declaration that all of level 3 and car park of the project are owned by CCSB and cannot be sell to any purchasers. The claim against the 5th Defendant was withdrawn.

On 12.2.2019 Mr. Bala was appointed as liquidator to DDSB via court order dated 12.2.2019 in JA-28PW-125-12/2018 to take over the Official Receiver’s role as liquidator to DDSB. The liquidator then filed an application to set aside the JID via enclosure 42 but only against the 1st Defendant DDSB which was allowed by the High Court of Johor Bahru on 22.11.2020. The setting aside order against DDSB was affirmed by the Court of Appeal.

As setting aside order must be clear and precise and cannot be founded by way of inferences, full trial then proceeded as against DDSB. On 2.10.2022, the High Court Johor Bahru dismissed the claim by CCSB against DDSB the 1st Defendant with cost of RM20,000.00. Findings by this Court [11] As can be sieved in the Grounds of Judgment (GOJ) prepared by the learned Judge (see: exhibit “BSR-12”), sadly despite what initially transpired to be a mutual agreement to venture into the JVA between both the Plaintiff and the 1st Defendant, things took a different turn. Allegations of non-compliance between the Plaintiff and the 1st Defendant against each other can be seen. Amongst others it was noted in para 24 of the GOJ that the Plaintiff avers that the 1st Defendant through its director had agreed to an amendment to the JVA via a letter dated 19.4.2013 S/N nkhSF4mIIkyn8foFiWxUaA **Note : Serial number will be used to verify the originality of this document via eFILING portal 6 (documented in Jilid 2 of the Bundles of Documents in that suit as pages 307-309).

The Plaintiff further avers that D1’s director had signed the said letter signifying his agreement to the amended terms. D1 on the other hand submits that the said letter remained as “ID” throughout the trial. The learned Judge found that as the original copy of the said letter was never produced, the terms contained in the said letter cannot be taken as having amended the JVA. That makes failure on the part of the Plaintiff to prove any amendments to the terms of the JVA.

To make it worst, the Plaintiff CCSB contended that the POA went missing but somehow ended in the custody of the lawyers who presented it for registration. The inferences made by the learned trial Judge which is important in deciding the present OS is that it would mean “someone from D1 had stolen the POA and given it to the lawyers to present it for registration”. Although the fact the POA said to be “stolen” was not proven by evidence was arrived at by the learned trial Judge, there is a clear distinction as to the acts performed by the 1st Defendant itself and its directors being the 2nd, 3rd and 4th Defendant.

This moved the trial Court to decide that the reliefs sought by CCSB against the 1st Defendant are distinct from that of the other Defendants despite the JID was entered against other Defendants as well. This is supported by the claim as extracted from the Statement of Claim para 36 as follows: a) “Gantirugi teladan dan Gantirugi teruk (aggravated) dari kesemua Defendan-Defendan; S/N nkhSF4mIIkyn8foFiWxUaA **Note : Serial number will be used to verify the originality of this document via eFILING portal 7 b) … c) Defendan Pertama dan/atau melalui Defendan Kedua hingga Defendan Keempat (sebagai Pengarah-Pengarah Syarikat) diperintahkan untuk menunjukkan dan membuktikan senarai penuh kesemua Pembeli-Pembeli bagi Projek: Blok A, Servis Apartment, Plaza Mentari, Johor Bahru; d) Defendan Pertama dan/atau melalui Defendan Kedua hingga Defendan Keempat (sebagai Pengarah-Pengarah syarikat) diperintahkan untuk menunjukkan dan membuktikan jumlah wang yang telah diterima dari kesemua pembeli-pembeli … e) Defendan Pertama hingga Defendan Keempat (sebagai Pengarah-pengarah syarikat) diperintahkan untuk menggantirugi kesemua jumlah wang yang telah diterima dari kesemua Pembeli-Pembeli… f) Satu deklarasi bahawa Perjanjian Usahasama (JVA) bertarikh 3.8.2012 tersebut telah ditamatkan dengan sah dan mengikat (“binding”) pihak-pihak; g) Satu deklarasi bahawa Surat Kuasa (POA) ... sebagai terbatal dan dibatalkan berkuatkuasa bermula 29.4.2013; h) Satu deklarasi bahawa keseluruhan Tingkat 3 dan Kawasan tempat letak kereta adalah kepunyaan Plaintif dan tidak boleh dijual kepada mana-mana pihak termasuklah pihak pembeli; i) …”

The above relief suggests the company and the Directors to be jointly and/or severally liable. The application to set aside the JID in enclosure 42 suit JA-22NCVC-8-01/2018 was filed only by the 1st Defendant and to set aside the JID entered against the 1st Defendant only and not others. The learned trial Judge was aware of the reliefs sought as reflected in the first para of the GOJ and most importantly in relief (f) it S/N nkhSF4mIIkyn8foFiWxUaA **Note : Serial number will be used to verify the originality of this document via eFILING portal 8 was portrayed that the relief amongst others sought by the Plaintiff was for an order that D1 as well the Second Defendant (“D2”), Third Defendant (“D3”) and Fourth Defendant (“D4”) compensate the Plaintiff or refund the total amount received from the purchasers for the project.

To this Court’s view, each respective Defendant has a liability cast separately on them. The relief sought may be the same between them but each holds a responsibility to satisfy the order. As the GOJ merely centers on DDSB based on the trial that proceeded and not on other Defendants where JID were obtained but with no application to set aside filed, hence it cannot be said that the application by Mr. Bala for this Court to make the necessary declaration and order as against other Defendants despite the absence of an application to set aside the JID by D2-D4, as sound, cannot be accepted. To do so would suggest that this Court is making an order based on inferences when the rightful procedure which ought to be resorted to by the applicant or Defendants but failed, is contained in the Rules of Court 2012. This moved this Court to find this application rather perplexed.

This Court could do no better than quote the case referred to by counsel for CCSB, a decision by the Federal Court in Lim Choon Seng v Lim Poh Kwee [2020] 5 MLJ 587, which says as follows: “(b) a court could not pronounce any judgment or order that bound non-parties who were not properly brought before the Court unless it was a case involving injunctions or where the non-party was the alter-ego pf the person already impleaded and before the court. The COA’s decision could not, in law, reverse the separate orders S/N nkhSF4mIIkyn8foFiWxUaA **Note : Serial number will be used to verify the originality of this document via eFILING portal 9 that were made by the High Court against the defendants in the 36 other suits where no appeals were lodged by those defendants…”

Similarly of relevance is the case of yet another Federal Court decision in Badiaddin bin Mohd Mahidin & Anor v Arab Malaysian Finance Bhd [1998] 1 MLJ 393, cited by counsel for CCSB which held as follows: “(Per Peh Swee Chin FCJ) When a judgment in the High Court has been perfected, a party to the judgment generally, apart from any appeal, cannot reopen the matter finalized in the judgment by seeking to alter it or amend it for the court would be functus officio by virtue of the ratio of Hock Hua Bank v Sahari bin Murid. Once perfected, a judgment of the High Court is also entitled to the obedience and respect from the parties to it on the basis of a command from a superior court of unlimited civil jurisdiction in the course of contentious litigation. It is also long established that one can apply to set aside an order of a superior court only in direct proceedings filed for the very purpose of having it set aside on valid grounds, but without doing so, one cannot attack its invalidity laterally by raising an objection to its invalidity in any other proceedings, without filing proceedings for applying to have it set aside first. When one wishes to file such proceedings to so set it aside, one must do so within the same proceedings or action in which the same order was obtained and not in a separate fresh proceeding or new action on any ground other than those mentioned in the quoted passage from Hock Hua Bank v Sahari bin Murid (see pp 417G-I and 418A-B); Hock Hua Bank Bhd v Sahari bin Murid [1981] 1 MLJ 143 followed…”. S/N nkhSF4mIIkyn8foFiWxUaA **Note : Serial number will be used to verify the originality of this document via eFILING portal 10

Therefore, although the law as to the responsibilities of directors of a private limited company is that the directors do not have personal liabilities on actions by the company, however in this case as there was already a JID order against D2 to D4 pronounced in accordance with the rules and procedure, it cannot simply be ignored, not until it is properly set aside. As to the other reliefs sought against JPN and the Municipal Council, section 54 of The Specific Relief Act 1950 clearly prohibits or ban such order against any department of any government in Malaysia. For these reasons, this application by Mr. Bala is dismissed. -Signed- (NURULHUDA NUR’AINI BTE MOHAMAD NOR) Judge High Court of Malaya Johor Bahru Dated: 31.07.2024 S/N nkhSF4mIIkyn8foFiWxUaA **Note : Serial number will be used to verify the originality of this document via eFILING portal 11 COUNSEL For the Petitioner: RS Maran (David Lazaroo with him) Messrs. The Law Office of Maran Ram Advocates & Solicitors Suite 5 Level 16 Block 5 VSQ PJ City Center Jalan Utara 46200 Petaling Jaya For the Respondents: Vivian Kong Mei Yi Sek Chia Yin Messrs. Tay Chambers Advocates & Solicitors No. 28 Jln Ponderosa 2/1 Taman Ponderosa 81110 Johor Bahru S/N nkhSF4mIIkyn8foFiWxUaA **Note : Serial number will be used to verify the originality of this document via eFILING portal