Kamal Hisham Bin Ja'Afar v Southern Ads Sdn Bhd (JA-22NCvC-33-02/2020)

On 6 June 2011, the Plaintiff was removed as a director of the Defendant. He returned to Malaysia in September 2015, and claimed that he had discovered the removal only in January 2016. In June 2017, the Plaintiff filed this action, and in September 2017, the Defendant filed an application to strike out (“the first striking out application”) the Plaintiff’s claim.

The Defendant subsequently, on 25 October 2018, filed an affidavit applying to admit as evidence, a letter authored by the Plaintiff, dated 11 July 2018 (“Letter of Undertaking”), undertaking to withdraw all civil actions against all companies related to DYMM, which included the Defendant. The Letter of Undertaking, however, was not considered at all, and did not form part of the cause papers. On 4 March 2019, the Defendant’s first application to strike out was 3 November 2020 …………………………………………………………………………………………………………………………………………………………… ………………………………………………………………………………………………………………………………………………………………………………………………………………… 3 dismissed by the High Court. An appeal lodged against that decision was also dismissed by the Court of Appeal, and the case was remitted to this Court for trial.

On 24 June 2020, the Defendant filed this Application, and this time, had included the Letter of Undertaking, which had not been considered earlier, either by the High Court or Court of Appeal.

This Application was allowed for the following reasons. The applicable law [7] The starting point of reference in this Application is Order 18 rule 19(1) of the Rules of Court, which reads as follows: Order 18 – Pleadings Rule 19. Striking out pleadings and endorsements

The Court may at any stage of the proceedings order to be struck out or amended any pleading or the endorsement, of any writ in the action, or anything in any pleading or in the endorsement, on the ground that –

it discloses no reasonable cause of action or defence, as the case may be;

it is scandalous, frivolous or vexatious:

it may prejudice, embarrass or delay the fair trial of the action; or 3 November 2020 …………………………………………………………………………………………………………………………………………………………… ………………………………………………………………………………………………………………………………………………………………………………………………………………… 4

it is otherwise an abuse of the process of the Court, and may order the action to be stayed or dismissed or judgment to be entered accordingly, as the case may be. [8] The law on striking out is trite and has been encapsulated by the Supreme Court in Bandar Builder Sdn Bhd & Ors v. United Malayan Banking Corporation Bhd [1993] 4 CLJ 7, [1993] 3 MLJ 36, where it was distilled by Mohamed Dzaiddin SCJ (as he then was) in the following words: The principles upon which the Court acts in exercising its power under any of the four limbs of O. 18 r. 19(1) Rules of the High Court are well settled. It is only in plain and obvious cases that recourse should be had to the summary process under this rule (per Lindley M.R. in Hubbuck v. Wilkinson [1899] 1 QB 86, p. 91), and this summary procedure can only be adopted when it can be clearly seen that a claim or answer is on the face of it "obviously unsustainable" (Attorney-General of Duchy of Lancaster v. L. & N.W. Ry. Co. [1892] 3 Ch. 274, CA). It cannot be exercised by a minute examination of the documents and facts of the case, in order to see whether the party has a cause of action or a defence (Wenlock v. Moloney [1965] 1 WLR 1238; [1965] 2 All ER 871, CA.). The authorities further show that if there is a point of law which requires serious discussion, an objection should be taken on the pleadings and the point set down for argument under O. 33 r. 3 (which is in pari materia with our O. 33 r. 2 Rules of the High Court) (Hubbuck v. Wilkinson) (supra). The Court must be satisfied that there is no reasonable cause of action or that the claims are frivolous or vexatious or that the defences raised are not arguable. [Emphasis added]. [9] I am guided also by the Federal Court in Seruan Gemilang Makmur Sdn Bhd v Kerajaan Negeri Pahang Darul Makmur & Anor [2016] 3 CLJ 1, where it was stated by Ramly Ali FCJ: The principles for striking out pleadings pursuant to O.18 r.19 of the ROC are well settled. It is only in a plain and obvious case that recourse should 3 November 2020 …………………………………………………………………………………………………………………………………………………………… ………………………………………………………………………………………………………………………………………………………………………………………………………………… 5 be had to the summary process under this rule; and this summary process can only be adopted when it can clearly be seen that a claim on the face of it is obviously unsustainable (see Bandar Builder (supra), Hubbuck & Sons Ltd .v. Wilkinson, Heywood & Clard Ltd [1889] 1 QB 86; Attorney General of the Duchy of Lancester .v. London and North Western Railway Company [1892] 3 Ch 274). The test for striking out application under O.18 r.19 of the ROC as adopted by the Supreme Court in Bandar Builder (supra) are inter alia as follows: a) it is only in plain and obvious cases that recourse should be had to the summary process under the rule; b) this summary procedure can only be adopted when it can be clearly seen that a claim or answers is on the face of it ‘obviously unsustainable’ (emphasis added); c) it cannot be exercised by a minute examination of the documents and facts of the case in order to see whether the party has a cause of action or a defence; and d) If there is a point of law which requires serious discussion, an objection should be taken on the pleadings and the point set down for argument under O.33 r.3 of the ROC; and e) The court must be satisfied that there is no reasonable cause of action or that the claims are frivolous or vexatious or that defenses raised are not arguable. . [10] The question that arises is what do these phrases in Order 18 Rule 19 (1) mean? ‘Scandalous’ generally refers to matters which improperly cast a derogatory light on someone, usually a party to an action with respect to moral character or uses repulsive language; ‘frivolous or vexatious’ generally refers to a groundless action, with no prospect of success, often raised to embarrass or annoy the other party to on action; and ‘abuse of the process of the court’ generally refers to situations where the court’s process is used for an unlawful object and not for the actual purpose intended for justice: per Ramly 3 November 2020 …………………………………………………………………………………………………………………………………………………………… ………………………………………………………………………………………………………………………………………………………………………………………………………………… 6 Ali JCA (as he then was) in See Thong & Anor v Saw Beng Chong [2013] 3 MLJ 235. [11] It is, therefore, the duty of this Court to scrutinise, with a fine-tooth comb, the evidence and the merits of the case to determine whether the action is baseless and bound to fail. This principle was set out by the Privy Council in Tractors Malaysia Bhd v Tio Chee Hing [1975] 2 MLJ 1, and the Supreme Court in Raja Zainal Abidin bin Raja Haji Tachik & Ors v British-American Life & General Insurance Bhd [1993] 3 MLJ 16. Contentions, evaluation, and findings Statutory right of shareholders to remove directors [12] One of the points raised by the Defendant was that the Plaintiff’s claim that he was illegally removed as a director, was unfounded. With regard to this submission, I have perused the relevant documents, such as the requisition notice and Notice of Extraordinary General Meeting, both dated 12 May 2011, and Board Resolution dated 6 June 2011 (exhibited respectively as LL5, LL6, and LL7, to the Affidavit of the Defendant affirmed by Lillian Low, and dated 6 May 2020); and the relevant provisions of the (former) Companies Act 1965 such as sections 141 (Register of directors, managers and secretaries), 145 (Calling of meetings), and Items 69 and 108 of the Fourth Schedule (Regulations For Management Of A Company Limited By Shares Interpretation) to the Companies Act 1965, which read: 3 November 2020 …………………………………………………………………………………………………………………………………………………………… ………………………………………………………………………………………………………………………………………………………………………………………………………………… 7

Subject to section 128, the company may by ordinary resolution remove any director before the expiration of his period of office, and may by an ordinary resolution appoint another person in his stead; the person so appointed shall be subject to retirement at the same time as if he had become a director on the day on which the director in whose place he is appointed was last elected a director.

A notice may be given by the company to any member either personally or by sending it by post to him at his registered address, or (if he has no registered address within Malaysia) to the address, if any, within Malaysia supplied by him to the company for the giving of notices to him. Where a notice is sent by post, service of the notice shall be deemed to be effected by properly addressing, prepaying, and posting a letter containing the notice, and to have been effected in the case of a notice of a meeting on the day after the date of its posting, and in any other case at the time at which the letter would be delivered in the ordinary course of post. [13] It is also fundamental to bear in mind that the Courts will not interfere with the statutory right of shareholders to remove directors. This was pronounced by Mahadev Shankar JCA in Tuan Haji Ishak Ismail v. Leong Hup Holdings Berhad & Other Appeals [1996] 1 CLJ 393, in adopting and endorsing Soliappan v. Lim Yoke Fan [1967] 1 LNS 164; [1968] 2 MLJ 21; and Dato' H.M. Shah & Ors. v. Dato' Abdullah b. Ahmad [1990] 1 LNS 91; [1991] 1 MLJ 91. [14] In light of the provisions and authorities cited, it is my view that the Plaintiff’s claim is baseless. Binding effect of Letter of Undertaking 3 November 2020 …………………………………………………………………………………………………………………………………………………………… ………………………………………………………………………………………………………………………………………………………………………………………………………………… 8 [15] However, what is pivotal to the determination of this Application is the Letter of Undertaking that the Plaintiff had signed, but was not considered by the Court in the first striking out application. The Defendant contended that based on the Letter of Undertaking, the Plaintiff was precluded from making this claim. [16] The relevant paragraph of the Letter of Undertaking reads:

Di samping itu patik juga akan menarik balik semua tuntutan sivil terhadap DYMM Tuanku dan juga apa-apa syarikat yang DYMM Tuanku mempunyai kepentingan secara langsung atau tidak langsung serta berjanji tidak akan membuat tuntutan terhadap DYMM Tuanku, Polis Di Raja Malaysia, Jabatan Peguam Negara berkaitan terhadap pendakwaan terhadap patik sebelum ini. Patik juga tidak akan membuat tuntutan sivil semula atau membuat apa-apa tuntutan terhadap DYMM Tuanku atau syarikat-syarikat yang DYMM Tuanku mempunyai kepentingan. Patik juga berjanji akan memulangkan segala dokumen syarikat-syarikat yang mana DYMM Tuanku mempunyai kepentingan yang berada dalam possessi patik. [17] The Plaintiff, contended that the Letter of Undertaking was prepared under coercion and duress, and was, therefore, to be challenged at trial. [18] In my view, this contention is flawed since a scrutiny of the Plaintiff’s statement of claim indicated that he had not pleaded any form of relief whatsoever, pertaining to the Letter of Undertaking. [19] As such, the Plaintiff was bound by the Letter of Undertaking. Reference on this point is made to Michael C Solle v United 3 November 2020 …………………………………………………………………………………………………………………………………………………………… ………………………………………………………………………………………………………………………………………………………………………………………………………………… 9 Malayan Banking Corporation [1986] 1 MLJ 45, where it was made very clear that a letter of undertaking which contains clear terms, is binding on the person who gives such undertaking. [20] The Plaintiff contended that since the Defendant’s first application to strike out, as well as its appeal was dismissed, this Application, which the Plaintiff avers is on a similar footing, should also be dismissed. I am unconvinced by this line of argument, bearing in mind that the Letter of Undertaking was NOT considered in the first application to strike out, and neither did it form part of the appeal records. Conclusion [21] In the upshot, based on the aforesaid reasons, and after careful consideration of all the evidence before this Court, and written and oral submissions of both parties, this Application was allowed with costs. Dated: 3 November 2020 ..……..…SIGNED…………. EVROL MARIETTE PETERS Judicial Commissioner High Court, Johor Bahru 3 November 2020 …………………………………………………………………………………………………………………………………………………………… ………………………………………………………………………………………………………………………………………………………………………………………………………………… 10 Counsel: For the Plaintiff – Basirah binti Karim; Messrs Jeffrey Wong, Noorul, Ho & Lim For the Defendant – Nor Shahadah binti Saari; Messrs Shukor, Baljit & Partners Cases referred to: ➢ Bandar Builder Sdn Bhd & Ors v. United Malayan Banking Corporation Bhd [1993] 4 CLJ 7, [1993] 3 MLJ 36 ➢ Michael C Solle v United Malayan Banking Corporation [1986] 1 MLJ 45 ➢ Raja Zainal Abidin bin Raja Haji Tachik & Ors v British-American Life & General Insurance Bhd [1993] 3 MLJ 16 ➢ See Thong & Anor v Saw Beng Chong [2013] 3 MLJ 235 ➢ Seruan Gemilang Makmur Sdn Bhd v Kerajaan Negeri Pahang Darul Makmur & Anor [2016] 3 CLJ 1 ➢ Tractors Malaysia Bhd v Tio Chee Hing [1975] 2 MLJ 1 ➢ Tuan Haji Ishak Ismail v. Leong Hup Holdings Berhad & Other Appeals [1996] 1 CLJ 393 ➢ Soliappan v. Lim Yoke Fan [1967] 1 LNS 164; [1968] 2 MLJ 21 3 November 2020 …………………………………………………………………………………………………………………………………………………………… ………………………………………………………………………………………………………………………………………………………………………………………………………………… 11 ➢ Dato' H.M. Shah & Ors. v. Dato' Abdullah b. Ahmad [1990] 1 LNS 91; [1991] 1 MLJ 91. Legislation referred to: ➢ Companies Act 1965, sections 141, 145, Fourth Schedule ➢ Rules of Court 2012, Order 18 rule 19