Lee Chiap Han v Ng Wah Leong (BA-22NCC-132-10/2022)

by the Company against the wrongdoer as it relates to losses to the Company and (b) against the Company as it relates to salaries and other emoluments due to the parties” The Company referred to in the Question is Epros Engineering Sdn Bhd (in liquidation) (“Company”) who is not a party in the proceedings. [2] I gave counsel two months to file written submissions and fixed 8- 1-2025 for hearing. Written submissions were not filed as directed. Based on letters from the solicitors to this Court, the parties indicated that they were declining to do so. Shortly before the case was called up for hearing on 8-1-2025, solicitors for the Plaintiff filed a set of written submissions. Counsel sought an adjournment to apply for leave to sue the wound up Company and amend the claim. The written submissions were not served on the Defendant’s solicitors. [3] I declined to adjourn the case and dismissed both the claim and counterclaim with no order as to costs. These are my broad grounds. Analysis and Findings [4] The basic tenets of company law derived from Saloman v A Saloman & Co Ltd [1897] AC 22 and Foss v Harbottle (1843) 2 Hare 461 apply in this case. This is the doctrine on the separate legal personality of a company and the rule that shareholders have no locus standi to sue directors and others for wrongs done to the company. [5] Other principles that follow are that a shareholder of a company has no interest, legal or beneficial, over the assets of a company (Macaura v Northern Assurance Co Ltd & Ors [1925] AC 619) and that no action lies at the suit of a member to make good a diminution in the value of his shareholding where it is merely a reflection of the loss suffered by the company (Marex Financial Ltd v Sevilleja (All Party Parliamentary Group on Fair Business Banking intervening) [2021] AC 39). [6] The above principles have been endorsed by the highest Court in Malaysia and are similarly so entrenched in Malaysian company law that this Court would regard it too trite to require further restatement. They form the basis for the Question which can be determined based on a review of pleadings alone. [7] The material facts in the Plaintiff’s pleaded case are as follows:

The Plaintiff and Defendant were shareholders and directors of the Company.

The Company was managed by the Plaintiff. The Defendant allegedly shut down the Company forcibly by asking the Plaintiff and all employees to leave, and changed the locks at the premises.

Consequently, the Plaintiff had to make various payments to suppliers and customers on behalf of the Company, and presented his claims to the Company’s accountant, but the Defendant refused to sign any Company cheques for it.

The Plaintiff also claims his belongings valued at RM297,450.00 were left at the Company’s premises, that he lost his salary and directors’ fees and that the Company premises were trespassed upon by intruders and thieves resulting in loss and damage to machinery and assets belonging to the Company.

Following this, the Plaintiff successfully petitioned to wind up the Company on 3-9-2019 vide Shah Alam High Court (Companies Winding Up) Petition No: BA-28NCC-677- 12/2018 (“Winding Up Petition”). [8] The Plaintiff claimed based on the above facts that the Defendant breached his fiduciary duties and an undefined constructive trust. His writ is endorsed with a claim for damages to be assessed and the following liquidated damages: [9] The Plaintiff pleaded and sought to argue that he has a personal right of action because the Defendant holds a fiduciary position and is a constructive trustee for him as a shareholder. [10] In the Plaintiff’s written submissions, counsel relied on Brunninghausen and Another v Glavanics [1999] NSWCA 199 (“Brunninghausen”) for the proposition that there are exceptions to the general principle of fiduciary duty owed by the directors to the company as established in Percival v Wright [1902] 2 Ch 421. [11] In Brunninghausen, the plaintiff had sold his shares to the defendant and his wife. The trial Judge held that the defendant as the sole effective director and majority shareholder in the company, owed a fiduciary duty to the plaintiff in relation to that sale on the basis that: “Where a director’s fiduciary duties are owed to the company this prevents the recognition of concurrent and identical duties to its shareholders covering the same subject matter. However this should not preclude the recognition of a fiduciary duty to shareholders in relation to dealings in their shares where this would not compete with any duty owed to the company.” [12] The above proposition has found no clear support in Malaysia. Itis in any case, peculiar to the facts of that case and has no analogy to the present case. The pleaded fiduciary duties allegedly owed to the Plaintiff are concurrent and identical to those owed to the Company. Indeed, the facts of this case are quite typical of the variety that call for a claim on behalf of the Company through a derivative action (as necessary) and against the Company for advances or services rendered to the Company. [13] For completeness, Brunninghausen can also be explained more generally by Peskin & Anor v Anderson & Ors [2001] BCLC 372 Civ 326: “Fiduciary duties owed by directors to shareholders only arise if there is a special factual relationship between the directors and the shareholders in the particular case capable of generating fiduciary obligations, such as a duty of disclosure of material facts, or an obligation to use confidential information and valuable commercial opportunities for the benefit of shareholders and not to prefer and promote the directors own interests at the expense of shareholders.” [Emphasis added] [14] No special factual relationship was pleaded in this case. [15] Finally, it would be remiss not to address the claim that RM297,450.00 worth of the Plaintiff’s personal property allegedly left at the Company premises were damaged or stolen. As mentioned, the Plaintiff’s pleaded cause of action against the Defendant is breach of fiduciary duty and an undefined constructive trust. This Court could find no recognizable cause of action against the Defendant on the alleged loss of his personal property on the Company’s premises on the facts pleaded. [16] The pleaded Defence and Counterclaim contain protracted allegations that the Plaintiff was racist and oppressed the Company’s workers in various ways. The actual causes of action in the Counterclaim for which remedies are claimed however, are breach of fiduciary duties, breach of trust and fraud in the misappropriation of the Company’s funds and assets, allegedly uncovered by auditors appointed by the Company. There is a further allegation that the Plaintiff broke into the Company’s premises and stole equipment and goods belonging to the Company valued at an estimated RM500,000.00. [17] The Counterclaim is for a liquidated sum of RM566,950.30 (RM316,950.30 + RM250,000.00) based on a 50% share of alleged losses suffered by the Company and general damages to be assessed. [18] On the facts as pleaded, the Defendant made no attempt to disguise or displace the Company as the proper plaintiff. Conclusion [19] For the above reasons, I dismissed the claim and counterclaim with no order as to costs. Bertarikh : 18 Februari 2025 SGD ELAINE YAP CHIN GAIK PESURUHJAYA KEHAKIMAN MAHKAMAH TINGGI MALAYA SHAH ALAM Peguam Untuk Plaintif: Elaine Foong Hui Ling, Messrs Elaine, Yun & Associates Untuk Defendan: Wong Yiip Shaun, Messrs Ys