Lee Quan Yoong v 1. ) Koh Heng Jin Holdings Sdn Bhd (WA-24NCC-382-08/2020)

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

WONG NYET FAH (NRIC No.: 430520-10-5624)

KOH PENG CHYE (NRIC No.: 660926-10-6559)

WONG NYET FAH, KOH SIEW LOON [As Executors and Trustees of the Estate of the late Koh Heng Jin]

KOH SIEW PECK (NRIC No.: 621016-10-7438)

KOH SIEW MEE (NRIC No.: 630914-10-8138)

KOH SIEW LOON (NRIC No.: 650610-10-7492) … DEFENDANTS BEFORE YA ADLIN BINTI ABDUL MAJID JUDICIAL COMMISSIONER JUDGMENT (Enclosure 56) A. Introduction [1] The plaintiff filed an application by way of enclosure 56, seeking the appointment of a receiver and manager in the 1st defendant and St. Andrews Partnership 1986, pending disposal of this action. [2] The plaintiff also prayed for alternative orders pending the disposal of this action, which are essentially as follows: a. Injunctions to restrain the 1st, 2nd and 3rd defendants from dealing with and/or disposing the assets and accounts of the 1st defendant and/or St. Andrews Partnership 1986; b. An injunction to compel the 1st and 2nd defendants to submit affidavits setting out the banking records, accounts and transactions of the 1st defendant and/or St. Andrews Partnership 1986; c. An order to allow the 1st defendant to spend a restricted amount of up to RM25,000 on administrative expenses or such other appropriate amount as this court thinks fit, for the 1st defendant and St. Andrews Partnership 1986’s day-to-day management; and d. An injunction to compel the 1st defendant and/or the 2nd defendant to provide the plaintiff with physical access and/or computer access to accounts of the 1st defendant and St. Andrews Partnership 1986. [3] The court dismissed enclosure 56, for the reasons set out below. B. Background Facts [4] The parties to this action are members of the same family. They are: a. Koh Peng Guan, the eldest son in the family. Koh Peng Guan passed away on 2 December 2020. He is now represented by his estate. b. The 2nd defendant, Wong Nyet Fah, the mother of Koh Peng Guan and his siblings; and c. The other siblings, namely, the 3rd defendant, Koh Peng Chye; the 6th defendant, Koh Siew Mee; and the 7th defendant, Koh Siew Loon. [5] The 4th defendant (who are 2nd and 7th defendants, named in their capacity as the executors and trustees of the estate of Koh Heng Jin) and the 5th defendant, Koh Siew Pek, were struck out from this action by way of orders dated 6 May 2021. [6] The 1st defendant was established by the late Koh Heng Jin in

Koh Heng Jin passed away on 4 February 2018. At the time of his passing, the shareholding of the 1st defendant was as follows: a. 40% of the shares were held by Koh Heng Jin; b. 40% of the shares were held by the 2nd defendant; and c. 20% of the shares were held by Koh Peng Guan. [7] Upon the passing of Koh Heng Jin, and pursuant to Koh Heng Jin’s will, changes were made to the shareholding of the 1st defendant. The shares held by the 2nd defendant were increased to 61% of the shareholding, while Koh Peng Guan maintained his 20% shareholding. The other shares were held by other siblings or on trust for the grandchildren of Kong Heng Jin and the 2nd defendant. [8] Koh Peng Guan claimed that he and his late father were responsible for the success of the 1st defendant and other family companies, and that upon Koh Heng Jin’s demise, the 2nd defendant took control of the 1st defendant and ousted Koh Peng Guan from the management of the 1st defendant. He claimed that the 2nd and 3rd defendants had carried out a series of oppressive acts against him. [9] The 2nd defendant challenged Koh Peng Guan’s allegations, by arguing that the business of the 1st defendant had been collectively built up by Koh Heng Jin and her, even before Koh Peng Guan’s involvement in the business. She also alleged that her husband had on many occasions expressed reservations about Koh Peng Guan’s character, and that Koh Peng Guan’s wrongdoings had caused him to be disinherited from Koh Heng Jin’s will. The 2nd defendant also claimed that Koh Peng Guan started demonstrating recalcitrant behaviour and abandoned his duties with the 1st defendant, once he learnt that he had been disinherited from his father’s will. [10] Koh Peng Guan filed this originating summons, seeking, inter alia, a declaration that the 2nd and 3rd defendants had conducted the affairs of the business of the family (the 1st defendant) in a manner that is oppressive and prejudicial to his interest as a shareholder of the 1st defendant. [11] The court has since, by way of an order dated 6 May 2021, converted the originating summons into a writ action, having found that the allegations of oppression made by Koh Peng Guan cannot be determined without a trial. C. The Application In Enclosure 56 [12] Enclosure 56 is filed pursuant to section 25(2) of the Courts of Judicature Act 1964 (“CJA”), read with item 6 of its schedule. Item 6 provides for the power of the High Court to appoint a receiver. [13] Enclosure 56 also relied on the procedural requirements on the appointment of a receiver, as set out under order 30 rule 1 of the Rules of Court 2012 (“ROC 2012”). Order 30 rule 1 provides as follows: “(1) An application for the appointment of a receiver may be made by summons or motion.

An application for an injunction ancillary or incidental to an order appointing a receiver may be joined with the application for such order.” [14] As can be seen from order 30 rule 1(2) of the ROC 2012, an application for an injunction ancillary or incidental to an order appointing a receiver may be joined with the application for the appointment of the receiver. Relying on this provision, enclosure 56 contains alternative prayers for injunctions pending the disposal of this action. D. Requirements For The Appointment of A Receiver And Manager [15] I will start by considering the tests to be met in the appointment of a receiver and manager. In allowing such an appointment, the court must ensure that the following three fundamental requirements are met: a. that there is a good prima facie claim of title by the applicant; b. that the property of the company is in jeopardy; and c. that the applicant would be in a worse position if the appointment is delayed. (see Matang Holdings Bhd & Ors v Dato Lee San Choon & Ors [1985] 2 MLJ 406; Lim Poh Choo v Absolute Ascend Sdn Bhd [2007] MLJU 770 and Yeoh Eng Kong v Dato’ Nik Ismail Bin Nik Yusoff & Ors [2016] MLJU 936). [16] All three requirements must be satisfied (see Yeoh Eng Kong (supra)). [17] The court was also referred to Rajabali Jumabhoy and others v Ameerali R Jumabhoy and others [1997] 2 SLR(R) 486, which had set out the general principles of law which apply to an application for a receiver and manager. The Singapore High Court held as follows: “12 The applicant who seeks to appoint receivers and managers over the property of a company (in contradistinction to an appointment of the company itself – for which it must be shown that the company is incapable of managing its own affairs) must prove that such property is in jeopardy. If this is proved, the appointment then rests at the discretion of the court. In exercising its discretion, the court proceeds with caution and is governed by a view of all the circumstances. 13 In deciding whether to appoint receivers and managers, the court will act on equitable principles. It will refuse such an appointment on grounds such as (a) the absence of necessity, (b) absence of benefit, (c) other adequate remedy,

improper purpose, (e) absence of assets, (f) laches and acquiescence, (g) hardship, (h) unwillingness of the applicant to do equity and (i) lack of clean hands. While the court will not decline to make the appointment simply because the majority of those interested in the property opposed the idea, it will not disregard the objection. It will be astute to protect any subsisting rights in the property other than those of the applicant. A receiver will therefore not be appointed if by doing so the interests of others are exposed to great risks.” (emphasis added) [18] The court was also reminded of the need to exercise caution in the appointment of a receiver, taking into account the adverse effect of such an appointment. In the Hong Kong decision of Marrakesh Investments Ltd v Tangiers Holdings Ltd and another; sub nom Re Jessop & Baird (Hong Kong) Ltd (No 2) (HKLRD) [2017] HKCU 2563, the following adverse effects of the appointment of a receiver were highlighted: a. It is expensive and depletes the assets of the company. b. It is generally damaging to an ongoing business. c. Where the principal relief sought is a buy-out, it will generally be desirable commercially that the business is to be operated by the person likely to take control of it if they are ordered to purchase the petitioner’s shares or a price is agreed voluntarily. Thus, if a petitioner in an oppression action seeking a buy-out order wishes to appoint a receiver, he has to demonstrate that there is a sufficient risk to the economic value of the company to justify such an intrusive order. E. Evaluation And Findings [19] As a start, I will consider the reliefs sought in enclosure 56, in relation to an entity referred to as St. Andrews Partnership 1986. The defendants argued that such an entity does not exist. The plaintiff has failed to prove the existence of such entity. [20] The court does nonetheless take note that the plaintiff’s affidavits refer to St. Andrews Estate 1986 (“SAE”). Whether SAE is the entity that the plaintiff had intended for enclosure 56 to apply to remains in question, as this was never clarified by the plaintiff. [21] The fact remains that the reference made in enclosure 56 is to St. Andrews Partnership 1986. Since such an entity is not in existence, there can be no relief granted in relation to St. Andrews Partnership 1986. On this basis, the court dismisses enclosure 56 in so far as the reliefs relate to St. Andrews Partnership 1986. [22] Moving on, the court will now consider whether the requirements on the appointment of a receiver and manager in respect of the 1st defendant have been fulfilled. As demonstrated above, these requirements (all of which must be met) are as follows: a. There is a good prima facie claim of title by the plaintiff. b. The property of the 1st defendant is in jeopardy. c. The plaintiff would be in a worse position if the appointment is delayed. First Requirement: There Is a Good Prima Facie Case Of Title By The Plaintiff [23] It is undisputed that the plaintiff holds 20% shares in the 1st defendant. It is on this basis that the plaintiff argued that she has direct interest and title in the assets of the 1st defendant, and a say on how those assets are managed and utilised. Thus, it was argued that the first requirement for the appointment of a receiver and manager of the 1st defendant would have been met, as she would have a good prima facie case of title over the assets of the 1st defendant. [24] I find this argument to be erroneous. As a shareholder, the plaintiff has no claim to the assets of the 1st defendant. Instead, the plaintiff’s title is over her shareholding in the 1st defendant (see Law Kam Loy & Anor v Boltex Sdn Bhd & Ors [2005] 3 CLJ 355). [25] Therefore, the court’s finding is that the first requirement for the appointment of a receiver and manager in the 1st defendant has been met in that the plaintiff has a good prima facie case of title, but only over her shareholding in the 1st defendant. She has no claim to title over the assets of the 1st defendant. The Second Requirement: The Property Of The 1st Defendant Is In Jeopardy [26] From my finding in the first requirement, I will address the issue of the property in jeopardy by first considering the property which the plaintiff has direct title over, namely, her shares in the 1st defendant. On this, what the plaintiff must show is that the value of her shareholding has been jeopardised, thus necessitating the appointment of a receiver and manager over the 1st defendant. [27] I find that the plaintiff has failed to show that there is a risk that the value of the plaintiff’s shareholding is in jeopardy. There are two reasons for this finding. The first is the Statement of Financial Position of the 1st defendant as at 31 December 2019. The statement shows that the non-current assets of the 1st defendant (consisting of investments in financial assets, investment properties and property, plants and equipment) amounted to RM128,949,46. Further, the total assets of the 1st defendant (inclusive of the non-current assets) amounted to RM150,268,997. The status of the 1st defendant’s assets, and specifically, the non-current assets, would be sufficient to address any concerns that the plaintiff may have in relation to the value of her shares. [28] The second reason is that the 2nd defendant has expressed that the 1st defendant is prepared to provide an undertaking that it would not sell the fixed assets of the 1st defendant or SAE without leave of court, pending disposal of this action. [29] With the financial status of the 1st defendant, and the undertaking prepared to be provided by the 1st defendant, my considered view is that the plaintiff has failed to prove that there is a risk of the value of her shares in the 1st defendant being in jeopardy. [30] I will now move on to consider the other properties of the 1st defendant which the plaintiff has claimed to be in jeopardy. The plaintiff’s claim arises from the following allegations: a. Payments to Kota Raya Development Sdn Bhd (“KRD”) for fabricated and fictitious renovations and construction works: The court finds that payments to KRD are not an indication that the property of the 1st defendant is in jeopardy. Based on documents provided, it is noted that KRD is a subsidiary of the 1st defendant, that had contracted to carry out maintenance of properties belonging to companies within the group. The plaintiff claimed that the letter of appointment of KRD was fabricated, but there was no proof provided to support this claim. Neither was there any admission by the 2nd defendant that payments made to KRD were fabricated or fictitious, as alleged by the plaintiff. b. The unauthorised use of the 1st defendant’s funds by the 2nd and 3rd defendants: The 2nd and 3rd defendants had shown that the amounts paid out to them were benefits or remuneration packages for directors of the 1st defendant which have been duly approved, were part-payment of debts owed by the 1st defendants to them or were monies held on trust. These amounts had been reflected in the accounts of the 1st defendant. I am unable to see how these payments could constitute a valid basis to suggest that the assets of the 1st defendant are in jeopardy or that the net value of the shareholding of the plaintiff is depreciating. c. Withdrawal of RM5,000,000 from SAE and diversion of funds away from SAE: As I have dismissed enclosure 56 in so far as it relates to St. Andrews Partnership 1986, and SAE is not referred to in enclosure 56, it would follow that issues raised by the plaintiff concerning the risk of assets of SAE being in jeopardy are irrelevant to the determination of enclosure 56. Notwithstanding this, the 2nd defendant had shown that the sum of RM5,000,000 was withdrawn from SAE’s account in Public Bank Berhad and subsequently placed in an interest-bearing fixed deposit account under SAE’s name with UOB Bank Berhad. There does not appear to have been any misappropriation of the money, as alleged by the plaintiff. d. Seizure of SGD100,000 by the Customs Department: The plaintiff claimed that the 2nd defendant was detained by the Customs Department of Malaysia on 29 May 2019, for bringing SDG100,000 into Malaysia without declaration, and that the source of the money could not be proven. The court is unable to see how this allegation could give rise to the risk of the assets of 1st defendant being in jeopardy. e. Charges against the 2nd and 3rd defendants: Criminal charges were brought against the 2nd and 3rd defendants, as a result of reports lodged by Koh Peng Guan. They relate to monies allegedly paid to the accounts of the 2nd and 3rd defendants pursuant to various transactions. These charges have yet to be proven, and the court is unable to agree that they give rise to the risk of the assets of 1st defendant being in jeopardy. f. The tax liability of the 1st defendant: The plaintiff claimed that shareholders of the 1st defendant were informed that the 1st defendant was not able to declare a higher dividend due to ongoing tax investigations, but that the real reason for the low dividend is that the 2nd defendant is under investigation. The plaintiff further alleged that the 2nd defendant intends to use the 1st defendant’s funds to pay her personal tax liability. The plaintiff had however not provided any evidence of her allegations against the 2nd defendant. The allegations remain bare allegations, and cannot form the basis to support the contention that the assets of the 1st defendant are in jeopardy. [31] Having considered the facts which the plaintiff claims give rise to the risk of the assets of the 1st defendant being in jeopardy, I turn to Ng Yong Long v Qua Hock Leong & Ors [2006] 5 MLJ 768, where the court held that: “[36] A mere assertion that there was a risk of dissipation is not good enough. There has to be credible, solid evidence to substantiate the alleged risk. A member must show that the Company’s assets are in jeopardy as a result of serious disputes between the shareholders in the Company (see Federal Transport Service Co Ltd & Ors v Abdul Malik & Ors [1973] 1 MLJ 216).” [32] Guided by Ng Yong Long (supra), I find that the plaintiff has failed to prove that the property of the 1st defendant is in jeopardy. The allegations made are bare allegations, do not give rise to the risk of dissipation of assets of the 1st defendant, and do not show that the 1st defendant’s property is in jeopardy. [33] Further and as mentioned above, the 2nd defendant has confirmed that the 1st defendant is prepared to provide an undertaking that it will not sell the fixed assets of the 1st defendant or SAE without leave of court, pending disposal of this action. Once this undertaking is given, the concern that the assets of the 1st defendant are in jeopardy will be unfounded. Third Requirement: The Plaintiff Would Be In A Worse Position If The Appointment Is Delayed [34] The plaintiff’s argument that she would be in a worse position if the appointment of a receiver and manager is delayed arises from her claim that she had been denied access to the accounts and management of the 1st defendant. [35] The court finds her claim to be fundamentally flawed as it is based on her misunderstanding of the division of powers of the management of a company by its directors, and the wishes of its shareholders. The function of the board of a company is to manage or oversee the conduct and direction of the company’s business. Shareholders are not entitled to be involved in the internal management of a company, or to gain access to its accounts. Thus, the plaintiff is in fact not entitled to gain access to the accounts of the 1st defendant. [36] On this basis, the court finds that the plaintiff’s argument that she would be in a worse position if the appointment of the receiver and manager is delayed, would fail. This finding is also supported by the court’s earlier finding that the plaintiff had not proven that the property of the 1st defendant is in jeopardy. [37] The court has also observed that there is a delay in the filing enclosure 56. An application for the appointment of receiver and manager or any injunctive relief must be made with sufficient promptitude and without delay. It is also to be noted that the allegations relied on in support of enclosure 56 were also made in support of the originating summons in this action, and were therefore available to Koh Peng Guan at the point of filing. Yet, enclosure 56 was filed seven months after this action was filed. The nature of the relief sought in enclosure 56 is exceptional. It should therefore not be made available when the plaintiff has slept on her rights (see Evercrisp Snack Products (M) Sdn Bhd & Anor v Sweeties Food Industries Sdn Bhd [1980] 2 MLJ 297; Haji Wan Habib Syed Mahmud v Datuk Patinggi Haji Abdul Taib Mahmud & Anor [1986] 2 MLJ 198). [38] The court finds that the delay in filing enclosure 56 is detrimental to the plaintiff and fatal to enclosure 56. If there had been a real concern on the dissipation of the assets of the 1st defendant, enclosure 56 should have been filed immediately after the filing of this action. The Alternative Prayers For Injunctive Reliefs [39] Having found that the requirements for the appointment of a receiver and manager have not been met, I move on to consider the alternative prayers for injunctive reliefs sought by the plaintiff. [40] These alternative prayers are aimed at freezing the assets and accounts of the 1st defendant and limiting the amounts available to the 1st defendant for the running of its day-to-day business. The reliefs sought are essentially for a Mareva injunction over the assets of the 1st defendant, and as such, the considerations in the granting of a Mareva injunction are relevant. They are as follows: a. That the plaintiff has a good arguable case; b. That the defendants have assets within the jurisdiction; and c. That there is a risk of the assets being removed before judgment could be satisfied, (see The Customs and Tax Administration of the Kingdom of Denmark v Saling Capital Ltd & Ors and other appeals [2021] 7 CLJ 857). [41] In Hock Hua (Sabah) Bhd v Yong Luik Thin & Ors [1995] 2 MLJ 213, the Supreme Court recognised that a Mareva injunction has a different and higher standard of proof compared to a prohibitory injunction. [42] The tests to meet in relation to the granting of a Mareva injunction, namely whether the plaintiff has a good arguable case, and whether there is a risk that the assets of the 1st defendant will be removed, may be assessed by considering the second requirement for the appointment of a receiver and manager, which is whether the assets of the 1st defendant are in jeopardy. The issue in both cases is the same, namely the preservation of the assets of the 1st defendant. [43] I have concluded that the plaintiff has failed to prove that the property of the 1st defendant is in jeopardy, as the allegations of the plaintiff are bare allegations, do not give rise to the risk of dissipation of assets of the 1st defendant and do not show that the 1st defendant’s property is in jeopardy. It therefore follows that the plaintiff does not have a good arguable case on the risk of dissipation of assets, to justify the granting of the alternative prayers of injunctions sought by the plaintiff in enclosure 56. [44] I shall conclude by referring again to Marrakesh Investments Ltd (supra), which serves to remind us of the far-reaching consequences of the appointment of a receiver and manager: “[17] … There is not some form of presumption that if the petitioner is excluded from management he is entitled to have a receiver appointed. In practice the court will have to balance the evidence of the risk of dissipation of assets or general damage to economic value against the disadvantages of appointing receivers …” (emphasis added) [45] The reliefs sought by the plaintiff are draconian remedies that have far-reaching consequences on the 1st defendant, which is an ongoing business. In this regard, there are concerns on the serious effect of the granting of enclosure 56, which is that it could interfere with the business of the 1st defendant. F.

[46] Based on the above, the court finds that the plaintiff has failed to meet the requirements for the appointment of a receiver and manager in the 1st defendant. Further, the balance of convenience lies against the grant of injunctions to preserve the assets of the 1st defendant. Enclosure 56 is dismissed with costs. [47] Nonetheless, to address concerns that the plaintiff has on the preservation of the 1st defendant’s assets, the court orders that pending the disposal of this action, the fixed assets of the 1st defendant shall not be disposed of without leave of court. Dated 23 March 2022 Adlin binti Abdul Majid Judicial Commissioner High Court of Malaya Commercial Division (NCC6) Kuala Lumpur Counsel: Plaintiff : V. Kalearasu (together with Shoba Murugiah) of Messrs Diedra Sharina & Co 1st Defendant : Simon Hong of Messrs Simon Hong 2nd, 3rd, 4th and 5th Defendants : Fiona Bodipalar (together with Khor Heng How and Sundradevan Ramachandran) of Messrs Bodipalar Ponnudurai De Silva 7th Defendant : Tan Tiea Chuan of Messrs TC Tan & Co Legislation referred to: Courts of Judicature Act 1964, section 25(2) Rules of Court 2012, order 30 rule 1 Cases referred to: Evercrisp Snack Products (M) Sdn Bhd & Anor v Sweeties Food Industries Sdn Bhd [1980] 2 MLJ 297 Haji Wan Habib Syed Mahmud v Datuk Patinggi Haji Abdul Taib Mahmud & Anor [1986] 2 MLJ 198 Hock Hua (Sabah) Bhd v Yong Luik Thin & Ors [1995] 2 MLJ 213Law Kam Loy & Anor v Boltex Sdn Bhd & Ors [2005] 3 CLJ 355 Lim Poh Choo v Absolute Ascend Sdn Bhd [2007] MLJU 770 Marrakesh Investments Ltd v Tangiers Holdings Ltd and another; sub nom Matang Holdings Bhd & Ors v Dato Lee San Choon & Ors [1985] 2 MLJ 406 Ng Yong Long v Qua Hock Leong & Ors [2006] 5 MLJ 768 Re Jessop & Baird (Hong Kong) Ltd (No 2) (HKLRD) [2017] HKCU 2563 Rajabali Jumabhoy and others v Ameerali R Jumabhoy and others [1997] 2 SLR(R) 486 The Customs and Tax Administration of the Kingdom of Denmark v Saling Capital Ltd & Ors and other appeals [2021] 7 CLJ 857 Yeoh Eng Kong v Dato’ Nik Ismail Bin Nik Yusoff & Ors [2016] MLJU 936