Lee Quan Yoong v Koh Heng Jin Holdings Sdn Bhd (WA-22NCC-216-05/2021)

LEE QUAN YOONG (No. K/P: 770825-14-5986) (Sebagai Eksekutor dan Pemegang Amanah bagi Estet Koh Peng Guan) KOH PENG GUAN (No. K/P: 680129-10-5471)

… PLAINTIF-PLAINTIF

KOH HENG JIN HOLDINGS SDN. BHD. (No. Syarikat: 52510-X)

WONG NYET FAH (No. K/P.: 430520-10-5624)

KOH PENG CHYE (No. K/P: 660926-10-6559) !

WONG NYET FAH, KOH SIEW LOON (Eksekutor dan Pemegang Amanah Estet Koh Heng Jin dan Pemegang Amanah di bawah Amanah Estet tersebut)

KOH SIEW PECK (No. K/P: 621016-10-7438)

KOH SIEW MEE (No. K/P: 630914-10-8138)

... DEFENDAN-DEFENDAN (DALAM TINDAKAN ASAL) ANTARA WONG NYET FAH (NO. K/P: 430520-10-5624) … PLAINTIF

LEE QUAN YOONG (No. K/P: 770825-14-5986) Sebagai Eksekutor dan Pemegang Amanah bagi Estet Koh Peng Guan !

… DEFENDAN-DEFENDAN (MELALUI TUNTUTAN BALAS) GROUNDS OF JUDGMENT A. Introduction [1] The 1st to 3rd defendants filed separate applications (in enclosure 306 for the 1st defendant, and enclosure 252 for the 2nd and 3rd defendants) to strike out the 1st plaintiff’s claim against them. I shall refer to the applications collectively as the “Striking Out Applications”. [2] After considering the evidence before the court and counsel’s submissions, I allowed the Striking Applications and provided brief grounds for my decision. These are the full grounds of the decision. B. Background Facts [3] This action has gone through a series of changes, both in terms of the modes of proceedings and the parties involved in these proceedings. Thus, to ensure a full understanding, I will set out a complete chronology of this action. [4] On 27 August 2020, Koh Peng Guan (“KPG”) commenced this action by way of an originating summons. KPG, who held 200,000 ordinary shares in the 1st defendant (equivalent to 20% shareholding), ! alleged that he had been oppressed by inter alia, the conduct of the 2nd and 3rd defendants. [5] KPG claimed that he and his late father Koh Heng Jin (“KHJ”) were the ones responsible for the expansion and success of the 1st defendant. He claimed that after KHJ’s passing, the 2nd defendant (who inherited the majority shareholding of the 1st defendant from KHJ) took control of the 1st defendant and ousted him from the management of the 1st defendant. KPG alleged that the 2nd and 3rd defendants had carried out oppressive acts against him and conducted the affairs of the 1st defendant in total disregard of his interest, resulting in his rights and interests as a minority shareholder of the 1st defendant being unfairly prejudiced. [6] The 2nd and 3rd defendants applied to convert the originating summons into a writ. On 6 May 2021, the court allowed the application, after finding various conflicts of facts arising from allegations raised by KPG, including the misuse of the 1st defendant’s funds, the creation of fictitious payment documents by the 2nd defendant and the manner in which the business of the 1st defendant was carried out. This decision was upheld by the Court of Appeal. [7] There were also numerous changes made to the parties to this action during the course of these proceedings. At the start of this action as an originating summons, the parties were as follows: a. KPG, the plaintiff; b. The company, the 1st defendant; ! c. KPG’s mother, the 2nd defendant; d. KPG’s siblings, the 3rd, 5th, 6th and 7th defendants; and e. The 4th defendant, who are the 2nd and 7th defendants as executors and trustees of KHJ’s estate. [8] However, the following events occurred after the filing of the originating summons: a. KPG passed away on 2 December 2020. His wife, Lee Quan Yoong (“LQY”), substituted herself as a plaintiff in this action in her capacity as the executor and trustee of KPG’s estate. b. The court struck out the plaintiff’s claim against the 4th defendant by an order dated 6 May 2021. The 4th defendant is the 2nd and 7th defendants sued in their capacities as executors and trustees of KHJ’s estate, and the court found that there could not be a cause of action for oppression against them in such capacity. They were in any event already sued in their personal capacities. c. The plaintiff’s claim against the 5th defendant was also struck out on 6 May 2021, as the court found that the 5th defendant was not involved in the management and had no knowledge of the operations of the 1st defendant. ! d. The 2nd plaintiff (who was originally the 7th defendant) was transposed as a co-plaintiff by an order of court dated 15 September 2021. However, the 2nd plaintiff later applied to withdraw all her claims against all defendants, and to be struck out from this action. The 2nd plaintiff’s application was allowed by the court on 17 May 2023. With the grant of the order, the 1st plaintiff remains the only plaintiff in this action. [9] Thus, at the time of the hearing of the Striking Out Applications, the only parties remaining in this action were: a. In the main action, the 1st plaintiff and the 1st, 2nd, 3rd and 6th defendants; and b. In the counterclaim, the plaintiff (the 2nd defendant in the main action) and the 1st defendant (the 1st plaintiff in the main action). C. Considerations and Findings [10] The 1st to 3rd defendants filed the Striking Out Applications on the ground that the 1st plaintiff’s claim against them is plainly and obviously unsustainable, as the claim was filed in the 1st plaintiff’s capacity as the executor and trustee of KPG’s estate. As the claim is one of oppression, the 1st to 3rd defendants contend that the 1st plaintiff lacks locus standi to continue with this action against them, since KPG’s estate is not a member of the 1st defendant. ! [11] Section 346 of the Companies Act 2016 (“CA 2016”) allows a member of a company to apply to the court for reliefs on the ground that the affairs or acts of the company had been conducted in an oppressive manner. The section provides that: “(1) Any member or debenture holder of a company may apply to the Court for an order under this section on the ground –

that the affairs of the company are being conducted or the powers of the directors are being exercised in a manner oppressive to one or more of the members or debenture holders including himself or in disregard of his or their interests as members, shareholders or debenture holders of the company; or

that some act of the company has been done or is threatened or that some resolution of the members, debenture holders or any class of them has been passed or is proposed which unfairly discriminates against or is otherwise prejudicial to one or more of the members or debenture holders, including himself.” (emphasis added) [12] From the above provision, an action for oppression must be made by a member or debenture holder of a company. It is not in dispute that the 1st plaintiff in her capacity as the executor and trustee of KPG’s estate, ! is not a debenture holder of the 1st defendant. The question arising is whether she would qualify as a member of the 1st defendant in such capacity. [13] Section 2(1) of the CA 2016 defines a “member” as: “(a) in the case of a company limited by shares, a person whose name is entered in the register of members as the holder for the time being of one or more shares in the company …” (emphasis added) [14] In Soh Jiun Jen v Advance Colour Laboratory Sdn Bhd & Ors [2010] 5 MLJ 342, a case involving an action for oppression under section 181 of the Companies Act 1965 (which contains similar wording on the person who may apply to the court for remedies for oppression), the Court of Appeal held that: “[17] The protection accorded under s 181 is only given to the following persons, namely:

member or shareholder of a company;

holder of a debenture of a company; and

in the case of a declared company under Part IX, the Minister (charged with responsibility for companies). ! Other than those persons stated above, no other persons can claim any protection or relief under s 181, not even a director, executive or employee of a company.” (emphasis added) [15] In the present case, the 1st plaintiff as the executor and trustee of KPG’s estate is not a member of the 1st defendant. [16] After KPG passed away in December 2020, the LQY obtained a grant of probate to administer the estate of KPG on 4 March 2021. LQY, via her solicitors, then issued a letter dated 24 March 2021 to the company secretary of the 1st defendant, requesting amongst others, that the 200,000 ordinary shares previously held by KPG be transferred to herself in her personal capacity as a beneficiary under KPG’s will. As a consequence, a share certificate dated 28 May 2021 was issued in LQY’s name for 200,000 ordinary shares in the 1st defendant, making her a shareholder of the 1st defendant. [17] Two points must be noted. First, KPG’s right to seek remedies under section 346 of the CA 2016 is not in question. He was a member of the 1st defendant and had the locus standi to file the originating summons to seek remedies for oppression. This takes us to the second point, that upon his death, the present action can only be pursued by his estate. However, KPG’s shares in the 1st defendant were transferred to LQY, and KPG’s estate was never registered as a shareholder of the 1st defendant. [18] Thus, the 1st plaintiff in her capacity as the executor and trustee of KPG’s estate was never a member of the 1st defendant. It is on this ! basis that I find that she is not entitled to seek remedies for oppression under section 346 of the CA 2016. [19] I must also highlight that the remedy sought by the 1st plaintiff is for the 2nd defendant to purchase the 1st plaintiff’s shares in the 1st defendant. However, the 1st plaintiff in her capacity as the executor and trustee of KPG’s estate is not a shareholder of the 1st defendant, since KPG’s estate is not a shareholder of the 1st defendant. Thus, there are no such shares owned by KPG’s estate available for purchase. In this regard, the remedy sought by the 1st plaintiff is academic and cannot in any practical sense be granted. The court cannot act in vain or grant declarations that are academic (see Ahmad Saidi bin Md Isa v Timbalan Menteri Hal Ehwal & Ors [2006] 3 MLJ 208). With this consideration, I am of the view that the 1st plaintiff’s claim ought to be struck out. [20] There are two main arguments raised by the 1st plaintiff in opposing the Striking Out Applications. [21] First, the 1st plaintiff contended that the issue of the 1st plaintiff’s locus standi to bring this action was not pleaded by the 2nd and 3rd defendants. In considering this argument, I am guided by Lim Guan Eng v Ruslan bin Kassim and another appeal [2021] 2 MLJ 514, where the Federal Court held as follows on pleading the issue of locus standi: “[98] In coming to this view, I have not overlooked the criticism by plaintiff’s counsel that the issue of locus standi of the plaintiff to bring this action was never pleaded or argued in the High Court. Being a jurisdictional challenge, I think the Court of Appeal was quite right in raising this issue especially ! since the Adnan Yaakub decision, which was starkly on point, was staring at them. The important consideration is that the parties were given a chance to submit on this new issue and so they cannot claim prejudice. It was also a matter, I think, that could be decided by looking at the pleadings alone and did not require viva voce evidence …” (emphasis added) [22] Thus, in this case, the question of the 1st plaintiff’s locus standi to continue with an action for oppression against the defendants is a jurisdictional issue which goes to the pre-condition for a party to bring a cause of action. Following Lim Guan Eng (supra), the court is therefore entitled to consider this issue, whether pleaded or not. This issue is in any event set out as issue 15 in the Issues To Be Tried that had been agreed to by the parties. [23] The second argument raised by the 1st plaintiff is that of res judicata. It is the 1st plaintiff’s contention that the 2nd and 3rd defendants’ application to set aside the order dated 8 January 2021 to substitute KPG with LQY (“Setting Aside Application”), had already addressed the issue of the 1st plaintiff’s locus standi to maintain this action. [24] I find this argument to be misconceived, and the reason for the Setting Aside Application is an important consideration which led me to this finding. It is important to note that the order to substitute KPG with LQY was made on 8 January 2021, before the LQY had obtained a grant of probate to administer KPG’s estate. ! [25] Thus, the Setting Aside Application was made on the ground that LQY had not obtained a grant of probate to administer KPG’s estate, at the time she obtained the order to substitute herself as the plaintiff in this action (on 8 January 2021). LQY subsequently obtained a grant of probate to administer the estate of KPG on 4 March 2021. As such, the 2nd and 3rd defendants withdrew the Setting Aside Application on 6 May 2021. [26] In the Setting Aside Application, the issue of the 1st plaintiff’s locus standi in relation to the cause of action under section 346 of the CA 2016 was not raised. Therefore there is no question of the doctrine of res judicata applying to prevent the issue of locus standi being raised in the Striking Out Applications. Further and in any event, the issue of locus standi in relation to the cause of action under section 346 of the CA 2016 would not have been relevant at the point the Setting Aside Application was filed, as KPG’s shares in the 1st defendant had yet to be transferred to LQY. The transfer of the shares only took effect on 28 May 2021. [27] The law on striking out is well-established. Under order 18 rule 19(1) of the Rules of Court 2012 (“ROC 2012”), the court may strike out any pleading on the ground that: “(a) 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

it is otherwise an abuse of the process of the Court …” [28] In Bandar Builder Sdn Bhd & Ors v United Malayan Banking Corporation Bhd [1993] 3 MLJ 36, the Supreme Court held that the power of the court to strike out should only be exercised when it can be clearly determined that a claim is on the face of it obviously unsustainable. [29] With the findings as set out above, I find that there can be no cause of action by the 1st plaintiff as the executor and trustee of KPG’s estate against the defendants under section 346 of the CA 2016. The 1st plaintiff’s action against the defendants is therefore obviously unsustainable. In my considered view, this is a plain and obvious case for the court to exercise its powers under order 18 rule 19(1) of the ROC

2012.

[30] The court allowed the Striking Out Applications, with costs. As a consequence, the court also found that the cause of action against the 6th defendant can no longer stand. The claim against the 6th defendant is also struck out. Dated 28 January 2025 ADLIN ABDUL MAJID Judge High Court of Malaya Kuala Lumpur ! Counsel: Plaintiff : V. Kalearasu (together with Shoba Murugiah) of Messrs. Deidra Sharina & Co 1st defendant : Simon Hong of Messrs. Simon Hong 2nd and 3rd defendants : Fiona Bodipalar (together with Dato’ Dr. Gurdial Singh Nijar, Abraham Au, Sundaradevan Ramachandran and Maryam Jamilah) of Messrs Bodipalar Ponnudurai De Silva