Kelana Galian Sdn. Bhd. v 1. ) 32 Datahills Sdn. Bhd. (WA-22NCvC-772-11/2021)

And 32 DATAHILLS SDN. BHD (Company No.: 1112085-W)

BT BINA GROUP SDN. BHD (Company No.: 1270382-V)

AU YONG WAI YAN (Sued as a partner of the 10th Defendant and as an advocate and solicitor)

YEOH BEE LING (Sued as a partner of the 10th Defendant and as an advocate and solicitor)

TETUAN AU YONG, NG & NGOH (A legal firm) …DEFENDANTS (In Original Case) and Between 32 DATAHILLS SDN. BHD (Company No.: 1112085-W) …PLAINTIFF

And

BT BINA GROUP SDN. BHD. (Company No.: 1270382-V) ...DEFENDANTS GROUNDS OF JUDGMENT (Application pursuant to Order 18, r.19(1) of the Rules of Court 2012) Introduction [1] This is a case where the 1st and 2nd Defendants (‘D1’ & ‘D2’, collectively, ‘the Defendants’) filed an application pursuant to Order 18 r 19(1) (‘the Application’) of the Rules of Court 2012 (‘ROC 2012’) praying for an order to strike out the Plaintiff’s statement of claim (‘SOC’). 25/09/2022 23:14:51 WA-22NCvC-772-11/2021 Kand. 75 Facts of the Case [2] The Plaintiff and the 7th Defendant (‘D7’) entered into a Sale and Purchase Agreement (‘the SPA’) dated 15.10.2018 as co-purchasers with D1 involving a freehold and vacant land, Lot 20002 situated at Seksyen 94A, Jalan Permai, 50460 Kuala Lumpur (‘the Land’). The agreed selling price was RM35,000,000.00. [3] The solicitor acting for the Plaintiff and D7 in the SPA was the 10th Defendant, Tetuan Au Yong, Ng & Ngoh. However, on 24.05.2019, the Plaintiff changed its solicitor and appointed Messrs Presgrave and Matthews to represent the Plaintiff’s interest under the SPA. [4] The parties agreed that a sum of RM3,500,000.00 was to be paid as deposit upon the execution of the SPA and the sum of RM31,500,000.00 being the balance purchase price (‘Balance Purchase Price’) was to be paid by the Plaintiff and D7 in accordance with the SPA. The Payment of the 10% deposit to D1 was not disputed in this case. [5] On 17.05.2019, D1 issued a notice of termination through its lawyers (‘1st Notice of Termination’) against the Plaintiff and/or D7, saying that they had failed to pay the Balance Purchase Price agreed in the SPA. However, D1 then issued an extended completion period to give the opportunity to Plaintiff and/or D7 to make the payments. [6] Nonetheless, D1 issued another notice of termination dated 10.10.2019 (‘2nd Notice of Termination’) due to the failure of the Plaintiff and/or D7 to pay the Balance Purchase Price despite the extended completion period. [7] Dissatisfied with the outcome, approximately 1 year later, the Plaintiff filed this action (‘this Action’) against all defendants stating that: a) There was an unlawful termination made by D1 towards the SPA; b) A declaration that the Plaintiff was the ultimate buyer of the Land; c) An order for the 4th, 5th, and 6th Defendants to pay RM3,500,000.00 to the Plaintiff according to the Guarantee Agreement; and d) A declaration that all of the Defendants had collectively conspired to commit fraud and deception against the Plaintiff. [8] Thereafter, the Defendants filed the Application to strike out the SOC. Submission by the Defendants [9] Briefly, the Defendants submitted that the Plaintiff’s claim ought to be struck out because, despite the numerous reminders and extension of time given to the Plaintiff and/or D7, they still failed to pay the Balance Purchase Price as provided under the SPA. It was also submitted that, the unpaid Balance Purchase Price goes to the fundamental terms of the SPA, thus the Plaintiff’s claim should be struck out. To support, the Defendants cited the case of Ching Yik Development Sdn Bhd v Setapak Heights Development Sdn Bhd [1996] 3 MLJ 675 [10] The Defendants also contended that the alleged Exclusive & Irrevocable Right to Purchase Agreement dated 08.11.2018 does not concern the Defendants as it was not privy to them. Hence, the Defendants were not bound by it. [11] The Defendants further premised that the Plaintiff’s claim was a purely contractual dispute. Thus, there was no reason for D1 to lift its corporate veil. Submission by the Plaintiff [12] In opposing the Defendants’ application, the Plaintiff submitted that this Action against the Defendants had been rightfully filed and the striking out application was baseless and an abuse of process. The Plaintiff premised that the Defendants failed to show that the SOC did not disclose a reasonable cause of action. To support, the Plaintiff cited Bandar Builder Sdn Bhd & Ors v United Malayan Banking Corporation Bhd [1993] 3 MLJ 36 and Seruan Gemilang Makmur Sdn Bhd v Kerajaan Negeri Pahang Darul Makmur & Anor [2016] 3 CLJ 31. [13] Moreover, the Plaintiff’s claim also involved the allegation of fraud, deception, and conspiracy between the Defendants and D7. Therefore, this case can only be determined after hearing the testimonies of the witnesses and other documentary evidence. Findings and Decisions of Court [14] Having appraised the facts adduced by the parties through affidavits and the exhibits, and the submissions by the learned counsels for all the parties, I dismiss the Application. Herein are my reasons. [15] It is a trite law that any application for striking out must be made under Order 18 r 19 of ROC 2012. Order 18 r 19 of ROC says: “Striking out pleadings and endorsements (O.18, r.19)

19.

(a) It discloses no reasonable cause of action or defence, as the case may be;

(b) It is scandalous, frivolous or vexatious;

(c) It may prejudice, embarrass, or delay the fair trial of the action; or

(d) 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.

(a) D1 exercised its contractual right to terminate the Sale and Purchase Agreement dated 15/10/2018 (‘SPA’) entered with the Plaintiff and the 7th Defendant as co-purchasers of the Land as a result of the wilful breach of the SPA by the Plaintiff and the 7th Defendant;

(b) The documentary evidence clearly show that D1 merely exercised its contractual right to terminate the SPA. The Plaintiff has thus failed to show any justifiable grounds to necessitate the lifting of D1’s veil of incorporation;

(c) The Plaintiff’s claim against the Defendants is on the face of it, obviously unsustainable;

(d) The Plaintiff has no reasonable/maintainable cause of action against D1and D2;

(e) The Plaintiff’s claim against the Defendants is scandalous and/or frivolous and/or vexatious and/or may prejudice, embarrass, or delay the fair trial of this Action; and

(f) The Plaintiff’s claim against the Defendants is an abuse of the process of the Court. [19] After examining the facts of the case, I find that the present case is not one of those cases where the SOC is suitable to be dismissed by way of striking out as sought by the Defendants in the Application. The arguments put forward by the Defendants have failed to convince this Court to strike out the SOC and thereby to dismiss Enclosure 1. [20] This Court is aware of the legal principle on the application under O 18 r 19(1)(a) of the ROC 2012 that the court only needs to consider whether the statement of claim discloses a reasonable cause of action. This is as decided by the Court of Appeal in the case of Abdul Rahim bin Abdul Hamid v Perdana Merchant Bankers Sdn Bhd [2000] 2 CLJ 457 where Mohktar Sidin JCA, observed (at p. 465) that: “… in considering an application under O. 18 r. 19(1)(a), the court has to take into account the statement of claim on the face of it and no consideration whatsoever shall be paid to the evidence in the form of these affidavits. So long as the statement of claim discloses a reasonable cause of action, however weak the claim is, the claim cannot be struck off summarily. At that stage of the proceedings, it is not for us or for the learned judge of the High Court to consider the merits of Carah's claim. On an application under O. 18 r. 19(1)(a) the court has only to consider whether the statement of claim discloses a reasonable cause of action. The well-established principle is that the court will not summarily strike out pleadings, except only in plain and obvious cases where the claim or counterclaim is plainly and obviously not sustainable.” [Emphasis added.] [21] Likewise, in the Federal Court case of Serac Asia Sdn Bhd v Sepakat Insurance Brokers Sdn Bhd [2013] 6 CLJ 673 where Abdul Hamid Embong FCJ laid down the following reminder in such striking out application: “[42]… Although the power to strike out is a wide discretion, it should be exercised with care and only when the threshold requirement of ‘an obvious and unsustainable case’ can be a pleading be struck out. In exercising it, and especially under r.19(1)(a), the court must have regard to the ‘quality of an all circumstances surrounding the plead (see Lembaga Kumpulan Wang Simpanan Pekerja v. Kesatuan Kakitangan Lembaga Kumpulan Wang Simpanan Pekerja [2000] 3 CLJ 81; [2000] 2 AMR 2119, FC). The court should also bear in mind that the effect of striking out a pleading is to completely deprive a plaintiff from having his day in court.” [Emphasis added] [22] The Defendants submitted that the Plaintiff’s claim was merely on contractual dispute i.e., concerning the terms of the SPA. The Defendants further argued that the failure of the Plaintiff to pay the Balance Purchase Price has caused the SPA to be terminated. Hence, the liability was on the Plaintiff and not the Defendants. To further support their contention, the Defendants cited the case of Ching Yik Development (supra). In this case, the Court of Appeal held that the appellant’s failure to pay the purchase price under the sale and purchase agreement was fatal hence the application for striking out was allowed. [23] The Plaintiff, on the other hand, averred that the SPA was wrongfully terminated by the Defendants. The Plaintiff claimed that according to clause 12 of the SPA, a notice to remedy should be given to the purchaser(s) i.e., the Plaintiff and/or D7 in the event they have failed to pay the purchase price within the completion period or the extended completion period. The Plaintiff contended that in our present case, no such notice was given prior to the termination of the SPA. [24] To refute, the Defendants then argued that the extension they gave was more than the 14-day notice to remedy provided under clause 12. And all of the extension notices have been given to the 10th Defendant, who was the Plaintiff’s previous solicitors. [25] A close reading of the SOC would show that the Plaintiff in its pleading contended that there was also deception, fraud, and mala fide by the Defendants and D7. The Plaintiff claimed that initially, the Plaintiff and D7 were indeed co-purchasers of the Land. However, the Plaintiff alleged that later, an additional agreement known as ‘Exclusive & Irrevocable Right To Purchase Agreement’ was entered by the parties, i.e., the Plaintiff and D7, whereby D7 will forfeit its right upon the Land and will make the Plaintiff the ultimate buyer of the Land. [26] After a close reading of the Plaintiff’s SOC, I am agreeable with the Plaintiff that this case is not a typical case that should be struck out at this stage. There are issues of facts in the pleadings that must be scrutinised by this Court through trial and through witnesses’ evidence to determine this case. These issues are, among others, as follows; a) Whether there was an arrangement between the Plaintiff and D7 in paying the Balance Purchase Price of the SPA; b) Whether the D1 or D2 was privy to the arrangement made the Plaintiff and D7; c) Whether the termination of the SPA made by D1 was correct and lawful; and d) What is the exact amount by the Plaintiff and/or D7 to D1. [27] The Defendants have also attacked the Plaintiff’s case against D2 who is the Director of D1. In essence, The Defendants alleged that there were no special circumstances that could justify the Plaintiff’s claim to lift the corporate veil against D2. Moreover, The Defendants further premised that the claim on conspiracy and/or collusion between D2 and the other defendants was baseless, and no particulars of conspiracy were ever pleaded. [28] To refute, the Plaintiff argued that a company’s corporate veil could be lifted when there has been the commission of actual fraud or common law fraud or equitable fraud. The Plaintiff cited the case of Law Kam Loy & Anor v Boltex Sdn & Ors [2005] 3 CLJ 355 and Chanel v Melwani2 International Sdn Bhd & Ors and other appeals [2017] 6 CLJ 567. [29] The Plaintiff further submitted that D2 had conspired and colluded with all of the defendants, including D7, to defraud the Plaintiff and consequently obtained financial gains and unjust enrichment since the Plaintiff had already made two payments under the SPA. Hence, to resolve this issue, the Plaintiff premised that a trial is needed so that the witnesses’ testimonies could be analysed. [30] It is my view that these disputes more so justify the need for a full trial to vindicate the accusations and allegations. I see no reason to strike out the Plaintiff’s case at this stage merely because the Defendants deny the Plaintiff’s claim. [31] Therefore, it is imminent for these issues to be further scrutinised by calling the witnesses to give testimony. The learned counsel of the Defendants repeatedly argued that this case is a purely contractual matter, and it was the Plaintiff who has failed to honour the SPA despite the numerous extensions given. The Defendants also submitted that the purported claim on conspiracy, fraud or collusion has nothing to do with the Defendants. By this, he submitted that the case must be struck out now. I disagree. [32] Unlike Ching Yik Development (supra), I am of the view that such allegations made by the Plaintiff in its pleading require a lengthier argument and detailed witnesses’ testimonies and evidence, and the law that comes with it needs to be explained in a more detailed manner. To this, issues about what actually transpired leading to the termination of the SPA and issues about whether the ‘Exclusive & Irrevocable Right to Purchase Agreement’ is binding on the Defendants, and the allegation of deception, fraud, and mala fide, to name a few, must be determined by complete witnesses’ testimonies and not mere affidavit evidence. I find the following ratio of Ramly Ali JCA (as he then was) in the Court of Appeal case of Sivarasa Rasiah & Ors v Che Hamzah Che Ismail & Ors [2012] 1 MLJ 473 extremely useful: “[14] A striking out application is not a trial on affidavits. It is not an application where the parties have to adduce evidence to establish the merits of their case. The court should not conduct a minute examination of the documents and the facts of the case. So long as the claim on the face of it disclose some cause of action or raises some question fit to be tried it should not be struck out. The mere fact the case is weak and not likely to succeed is no ground for the pleadings to be struck out. [15] A striking out order should not be made summarily by the court if there is issue of law that requires lengthy argument and mature consideration. It should also not be made if there is issue of fact that is capable of resolution only after taking viva voce evidence during trial, (see Lai Yoke Ngan & Anor v Chin Teck Kwee & Anor [1997] 2 MLJ 565 (Federal Court)). [Emphasis added] [33] Hence, after reading the Plaintiff’s SOC, I agree that this case cannot be struck out at this stage. As highlighted by See Thong & Anor v Saw Beng Chong [2013] 3 MLJ 235 where His Lordship Ramly Ali JCA (as he then was) again premised at p. 242 that: “[11] The learned judge must bear in mind that striking out a claim for no reasonable cause of action under sub-para (1)(a) is only appropriate in a plain and obvious case. The learned judge must satisfy that the statement of claim as it stands is insufficient, even if proved, to entitle the plaintiff to the relied which they asked for. The procedure is a summary procedure. It should only be adopted when it is conspicuously clear that the claim on the fact of if its obviously unsustainable. Just look at the statement of claim. The test to be applied is whether on the face of the statement of claim. The test to be applied is whether on the face of the statement of claim, the court is prepared to conclude the cause of action is obviously unsustainable (see Federal Court decision in New Straits Times (Malaysia) Bhd v Kumpulan Kertas Niaga Sdn Bhd & Anor [1985] 1 MLJ 226 [12] We have scrutinised the statement of claim filed by the appellants against the respondent in the present case. We are of the view that the statement of claim assuming the factual allegations are true or proven and without looking at the affidavit evidence, clearly discloses some cause of action under the law of contract or has raised some questions fit to be decided. The statement of claim is not hopeless, baseless or without any foundation in law. The statement of claim may not be perfect and ‘not-so strong’ in supporting the appellants’ claim; but the mere fact that the case is weak and is unlikely to succeed at trial is not a ground for the claim to be struck out (see Bandar Builder Sdn Bhd & Ors v United Malayan Banking Corporation Bhd [1993] 3 MLJ 36 (Supreme Court); Loh Holdings Sdn Bhd v Peglin Development Sdn Bhd & Anor [1984] 2 MLJ 105).” [Emphasis added]. [34] In addition, I also find that this Action is not suitable to be struck out on the other grounds under Order 18 r 19. Order 18 r (1)(b) deals with pleadings which are ‘scandalous, frivolous or vexatious’. In See Thong (supra), His Lordship Ramly Ali JCA also premised that under sub-para (1)(b), the judge is entitled to look at the affidavit evidence adduced by the parties, and if there is conflicting evidence arising in said affidavits it will not be appropriate to resolve the conflict in a striking out application. The proper time for doing so is at discovery or by cross-examination of witnesses or deponents. [35] Besides, in the case of Gasing Heights Sdn Bhd v Aloyah bt Abd Rahman & Ors [1996] 3 MLJ 259, His Lordship Mahadev Shankar J (as he then was) opined that since the application for striking out was based on all the limbs of O 18 r 19(1)(a),(b),(c) and (d), the court was not confined to pursue the averments in the statement of claim, but could also look to the evidence, in the numerous affidavits filed for and in support of the application. [36] Similarly, in the present case, I find that there are several conflicting evidence and facts that require lengthy deliberation. For instance, whether the amount so paid by the Plaintiff to D1 was RM8,000,000-00 or RM9,000,000.00? Also, the ambiguity about the payment of RM3,500,000.00 via cheque dated 14.11.2018 issued by D7 via the Public Bank Berhad Cheque needs to be vindicated through trial. [37] Next and the most important of all, there exists the allegation on the existence of fraud, deception, and mala fide. This cannot be dismissed merely because the Plaintiff’s counsel has not made it clear in its letter dated 04.06.2019 to D1’s lawyers. The main focus in striking out applications is on the pleading (the SOC in this case). The SOC in our present case has indeed laid down the necessary details about these allegations. As highlighted in See Thong (supra), the fact that the plaintiff may has a weak case does not mean it should be struck out. [38] Likewise, in Datuk Bandar Kuala Lumpur v Pembinaan RT Sdn Bhd [2013] 2 MLJ 873, the respondent’s claim against the appellant was founded on a breach of contract and the tort of deceit. It was held by the Court of Appeal that the issues as to the existence of alleged contract and the element of deceit as claimed by the respondents were prima facie triable issues, which need to go for trial to enable the respondent to adduce relevant evidence to prove its claim. [39] Therefore, the grounds raised by the Defendants are not enough for this Court to strike out the Plaintiff’s SOC at this stage. As mentioned in the discussion above, there are also conflicting facts and serious issues to be tried in this case. Hence, this case deserves to proceed to trial to enable this Court ascertaining the truth of the cases put forward by the parties. Conclusion [40] Having examined the SOC and the parties’ affidavits and exhibits presented before me, it is this Court’s view that the SOC, on the face of it, discloses reasonable cause of action and the Plaintiff had successfully established that its SOC is not wholly unsustainable. They deserve a chance to be vented out in trial. [41] This Court, therefore, dismiss the Application in Enclosure 19 with costs. Dated: 25th September, 2022 Dr John Lee Kien How @ Mohd Johan Lee Judicial Commissioner High Court Malaya Kuala Lumpur For the Plaintiff Yoong Sin Min, Marianne Loh, & Koh Mui Woon Messrs. Shook Lin & Bok For the Defendants Sithambaram S/O Vairavan, Ruebankumar A/L Asokan, & Ng Su Yin Messrs. Sitham & Associates Table of Authorities Cases Abdul Rahim bin Abdul Hamid v Perdana Merchant Bankers Sdn Bhd [2000] 2 CLJ 457 Bandar Builder Sdn Bhd & Ors v United Malayan Banking Corporation Bhd [1993] 3 MLJ 36 Ching Yik Development Sdn Bhd v Setapak Heights Development Sdn Bhd [1996] 3 MLJ 675 Datuk Bandar Kuala Lumpur v Pembinaan RT Sdn Bhd [2013] 2 MLJ 873 Gasing Heights Sdn Bhd v Aloyah bt Abd Rahman & Ors [1996] 3 MLJ 259 See Thong & Anor v Saw Beng Chong [2013] 3 MLJ 235 Serac Asia Sdn Bhd v Sepakat Insurance Brokers Sdn Bhd [2013] 6 CLJ 673 Sivarasa Rasiah & Ors v Che Hamzah Che Ismail & Ors [2012] 1 MLJ 473 Rules Order 18 r 19 of Rules of Court 2012