Ksa Aushatha Medic Sdn Bhd v Malini A/P Kerisnan (WA-12ANCC-80-08/2024)

A joint venture agreement dated 1.4.2019 was entered into between the Plaintiff and the 1st Defendant wherein they would operate a business known as Skin Master Medispa. The Plaintiff had invested RM 350,000.00 into the joint venture business.

However, disputes arose between the parties and the Plaintiff claimed that the 1st Defendant had breached its obligations to properly manage and operate the joint venture business.

The Plaintiff then filed Enclosure 10 to amend her Writ and Statement of Claim dated 8.5.2024 and Enclosure 11 to add the proposed 2nd and proposed 3rd Defendants who are directors of the 1st Defendant as parties to the action. Enclosures 10 and 11 were allowed by the learned Session Court Judge.

The Appellant appealed against the decision of the learned Session Court Judge allowing the Plaintiff’s applications under Enclosures 10 and 11.

I have read the grounds of judgment by the learned Session Court Judge dated 31.10.2024 (“the GOJ”) and found myself in agreement with her reasons for allowing both Enclosures 10 and 11.

In her GOJ, the learned Session Court Judge had comprehensively set out the background facts, the nature of the applications, the applicable law and adequately provided reasons for her decision which I found to be cogent and in full agreement. For this reason, I do not find it necessary to write a full judgment and will respectfully adopt the GOJ.

I will only add further that under the joint venture agreement dated 1.4.2019 (“the JV Agreement”), the parties had agreed to the creation of a Management Board comprising both the Plaintiff and the proposed 2nd Defendant as representative of the 1st Defendant. More specifically, Clause 6.1 of the JV Agreement provides for the appointment of an operations director and co-operations director who would be responsible for the operation of the Skin Master Medispa (“the JV Business”).

Clause 6.4 provides that both the operations director and the co-operations director shall undertake the decisions jointly. The said clause is reproduced below: “6.4 The operations director and co-operations director shall only undertake the decisions set out in Clause 6.3 above jointly and shall not act independently of each other. The operations director and co-operations director will liaise with each other in respect of all major decisions to be taken to ensure the timely performance of the services provided by the Skin Master Medispa. In the event, either the operations director or the co-operations director objects to a decision to be made as aforesaid, the objecting director shall be entitled to specify in writing the issue for which there is an objection and refer the matter to the Management Board for resolution.”

It is not in dispute that the proposed 2nd and 3rd Defendants were appointed as the operations director and the co-operations director of the JV Business.

The 1st Defendant’s primary objection to the application to add the proposed 2nd and 3rd Defendants was that each of them had no privity of contract with the Plaintiff and neither did they as directors of the 1st Defendant owe any fiduciary duties to the Plaintiff. Further, any roles that the proposed 2nd and 3rd Defendants undertook in the JV Business were as merely representatives of the 1st Defendant only and not in their personal capacities.

However, whilst the proposed 2nd Defendant was appointed to the Management Board as the representative of the 1st Defendant, the operations director and the co-operations director appear to be responsible to the Management Board which included the Plaintiff.

Without making any determination on the exact legal duties owed by the proposed 2nd and 3rd Defendants as the operations and co-operations directors of the JV Business (if at all) at this stage, it seems to me that the Plaintiff must be permitted to canvas her case that the proposed 2nd and 3rd Defendants did owe her certain duties in their capacities as the operations and co-operations directors of the JV Business. To dismiss the application would deprive the Plaintiff of the opportunity to bring her claims against them, even if it may appear to be a weak case. This, of course, can only be determined at the trial of the action.

Accordingly, for the reasons above, it is my judgment that the Respondent’s/Plaintiff’s application to add the proposed 2nd and 3rd Defendants under Enclosure 11 should be allowed.

Further, since the application to amend the Writ and Statement of Claim is merely consequential upon the addition of the proposed 2nd and 3rd Defendants, the application under Enclosure 10 must similarly be allowed.

In the premises, the 1st Defendant’s appeals are dismissed with costs. Dated the 18th day of December 2024 ONG CHEE KWAN Judge of the High Court of Malaya High Court of Kuala Lumpur, NCC2 & Admiralty Counsel:

Ms. Ava Geh for Appellant

Ms. Thulasy Suppiah for Respondent