LIM Che En v Saw Chai Soon (22NCVC-718-12/2013)

It has been over eleven (11) months since this Honorable Court recorded/entered Judgment dated 29.1.2016 against the Defendants as follows:

An independent auditor be appointed by this Court to do inspection and review of accounts of KFL Restaurant and KFL Food Corner since the establishment of partnership between Plaintiffs and Defendants on 15.8.2005.

(ii) That the Defendants pay the Plaintiff the amount of money payable as part of and/or profit after the inspection and review of partnership account between the Plaintiffs and Defendants.

Further, on 31.3.2016, the Plaintiffs and Defendants’ solicitors held a meeting at Messrs KF Cheong’s office to discuss on audit and inspection process on KFL Restaurant and KFL Food Corner in which Messrs KF Cheong had requested for documents to fix the audit fees.

After Messrs KF Cheong received a copy of accounts, they had via e-mail dated 1.6.2016 informed the parties of audit fees and the necessary documents required to conduct audit/inspection on KFL Restaurant and KFL Food Corner.

Via email dated 24.6.2016, Plaintiffs’ solicitor had informed the Defendants’ solicitor that the Plaintiffs had agreed to appoint Messrs KF Cheong and that the Defendants’ solicitor to inform whether they agreed to appoint Messrs KF Cheong. There were no answers by the Defendants but the defendant had filed an application to stay the proceedings pending the disposal of the Defendants’ appeal that was fixed on 5.10.2016 by the Court of Appeal. The Plaintiffs had agreed to the application for stay of proceedings.

The Defendants’ appeal was dismissed by the Court of Appeal on 5.10.2016 and the Plaintiffs had written to the Defendants to commence the review and inspection on KFL Restaurant and KFL Food Corner and had requested the Defendants to furnish the necessary documents and to pay the deposit to Messrs KF Cheong but until this application was filed, there was no reply by the Defendants.

Since the Defendants had refused to any give cooperation to Plaintiffs for the audit/inspection process, the Plaintiffs had no other option but to file this application. Chronology of Case [2] I adopt the relevant part of the chronology preceding this application as outlined in the Plaintiff’s submission as follows:

The Court had allowed the Plaintiff’s claim as per the Amended Judgment dated 29.1.2016 (hereinafter referred to as the “The said Judgment”) (please refer to exhibit A Affidavit in Support) stated as follows:

An independent auditor be appointed by this Court to do inspection and review of accounts of KFL Restaurant and KFL Food Corner since the establishment of partnership between Plaintiffs and Defendants on 15.8.2005.

(ii) That the Defendants pay the Plaintiff the amount of money payable as part of and/or profit after the inspection and review of partnership account between the Plaintiffs and Defendants. Page 6 of 19

(iii) Interest at 5% per annum based on the amount allowed in paragraph (ii) above from the date of filing of the Writ Summon until full settlement.

(iv) Cost of RM30,000.00

Cost on solicitor-client basis

When the decision is given, this Honorable Court had given liberty to Plaintiffs and Defendants to appoint an auditor to inspect and review accounts of KFL Restaurant and KFL Food Corner since the establishment of partnership between the Plaintiffs and Defendants on 15.8.2005 and this Honorable Court had fixed a date for case management for parties to appoint auditor.

Further, on 31.3.2016, the Plaintiffs’ and Defendants’ solicitors held a meeting at Messrs KF Cheong’s office to discuss on audit and inspection process of KFL Restaurant and KFL Food Corner in which Messrs KF Cheong had requested for documents to fix the audit fees. Messrs KF Cheong had requested for a copy of profit and loss account of KFL Restaurant and KFL Food Corner to enable them to fix the audit fee and the Defendants’ solicitor agreed to furnish profit and loss account of the 2 restaurants. Page 7 of 19

This was accompanied by an e-mail which was exchanged between Plaintiffs’ and Defendants’ solicitors and Messrs KL Cheong & Co dated 18.4.2016 (please refer to Exhibit – B the said Affidavit in Support).

Plaintiff submitted that since 13.3.2016, what could be seen was the Defendant’s demeanour in purposely delaying to furnish the profit and loss account of KFL Restaurant and KFL Food Corner to Messrs KF Cheong. Only after several reminders via letters and emails dated 6.4.2016, 18.4.2016, 5.5.2016 (please refer to Exhibit “C” Affidavit in Support) served on Defendants’ solicitor, the profit and loss account of KFL Restaurant and KFL Food Corner was furnished to the Plaintiff’s solicitor on or about the end of May 2016 to be forwarded to Messrs KF Cheong. A copy of the said accounts was forwarded to Messrs KF Cheong & Co by Plaintiff’s solicitor on 31.5.2016 (please refer to Exhibit “C” Affidavit in Support).

After Messrs KF Cheong received a copy of the account, they had via e-mail dated 1.6.2016 notified the Defendant’s solicitor of the audit fees and the necessary documents to enable the Page 8 of 19 auditing/inspection on KFL Restaurant and KFL Food Corner to be done.

The documents requested by Messrs KF Cheong & Co are as follows:

RHB Bank Statement for the accounts of KFL Restaurant and KFL Food Corner from the year 2008 until 2013.

General Ledger for year 2008 to 2013 for KFL Restaurant and KFL Food Corner.

Stock Records from 2008 until 2013 for KFL Restaurant and KFL Food Corner.

Purchases and Expenses Bill since year 2008 until 2013 for KFL Restaurant and KFL Food Corner.

Supplier Statement of KFL Restaurant and KFL Food Corner from 2008 until 2013 including from Hip Heng Long, Solid Logic Sdn Bhd, Commercial Marketers and Distributors Sdn BHd, Tong Tuck Sdn Bhd, Agensi Jia Li Sdn Bhd and Syarikat Tee Siang Sdn Bhd.

Income Tax Computations for year end 2008 until year end 2013 for KFL Restaurant and KFL Food Corner.

Payment Vouchers from year 2008 until 2013 for KFL Restaurant and KFL Food Corner.

Bank In Slips from year 2008 until 2013 for KFL Restaurant and KFL Food Corner. (hereinafter referred to as the said additional documents).

The said additional documents that were requested by Messr. KF Cheong & Co are specifically mentioned in Messrs KF Cheong & Co.’s letter dated 31.5.2016 sent via e-mail dated 1.6.2016 attached in Exhibit “D” Afidavit in Support.

Via e-mail dated 24.6.2016, Plaintiffs’ solicitor informed Defendants’ solicitor that the Plaintiffs agreed to appoint Messrs KF Cheong and asked whether the Defendants’ solicitor agreed to the appointment of Messrs KF Cheong. There was no answer by the Defendants but the defendant had filed an application to stay the proceedings pending the Defendants’ appeal that was fixed on 5.10.2016 for disposal by the Court of Appeal. Page 10 of 19

Further, during the case management before the Deputy Registrar on 12.10.2016, the Defendants’ solicitor had informed that the Defendants agreed on the appointment of Messrs KF Cheong & Co but refused to furnish documents requested by Messrs KF Cheong & Co via email dated 1.6.2016.

Thus, Plaintiffs’ solicitor sent an e-mail on 14.11.2016 enquiring Messrs KF Cheong whether review and inspection could be done without the said additional documents. Messrs KF Cheong & Co had via e-mail dated 14.11.2016 (please refer to Exhibit “F” Affidavit in Support) to advice that audit can be done with the said additional documents to verify the account accuracy and that Messrs KF Cheong unable to audit if the said additional document is not provided.

There was no response from the Defendants’ solicitor to the Plaintiffs’ solicitor’s e-mail dated 14.11.2016 for documents requested to be supplied and for confirmation on the audit fee to be paid to KF Cheong. Page 11 of 19

Vide e-mail dated 13.02.2017 the Defendants’ solicitor requested Plaintiffs’ solicitor to collect the documents which were not identified from the former’s office.

On the same day, KF Cheong sent an e-mail to the Defendants’ solicitor requesting that payment be made first before proceeding with the audit but there was no response at all from the said solicitors on the audit fee payable. Finding [3] One of the main issues raised by D1 and D2 in opposing this application is that the doctrine of res judicata applies to the present situation on the ground that P is in fact seeking to reopen this case after judgment has been entered. [4] It must first be noted, as contended by P, that this is a necessary application to enforce the terms of the Court judgment. P referred, inter alia to the case of Edmund Charles Liebenberg v ICB-Griffin Marketing Sdn. Bhd & Ors [2011] 9 MLRH where in dealing with an application under Order 45 Rule 6, Rules of the High Court, 1980 the Court held: Page 12 of 19 “Enclosure 50 is an application by the Petitioner pursuant to Order 45 Rule 6(2) of the rules of the High Court 1980 (RHC) requiring the 4th, 5th, 6th and 9th Respondents to comply with the Order of the High Court dated 31.3.2005 (“the substantive Judgment”) within 7 days of service of the Order” Order 45 Rule 6(2) RHC provides that if a judgment or order does specify a time within which the act is done the Court has the power to make an order requiring the act to be done within a stipulated time after the service of the Order.” [5] D1 and D2, on the other hand, contended that P vide L44 was attempting to relitigate the dispute after having obtained final judgment in terms based on the pleaded claim but were now seeking to widen the scope of the judgment. Reference was made to the Federal Court case of Asia Commercial Finance (M) Bhd. v Kawal Teliti Sdn. Bhd. [1995] 3 CLJ 783 where Peh Swee Chin, FCJ expressed the principle and rationale of res judicata in these terms: “What is res judicata ? It simply means a matter adjudged, and its significance lies in its effect of creating an estoppel per rem judicature. When a matter between two parties has been Page 13 of 19 adjudicated by a Court of competent jurisdiction, the parties and their privies are not permitted to litigate once more the res judicata, because the judgment becomes the truth between such parties, or in other words, the parties should accept it as the truth; res judicata pro veritate accipitur. The public policy of the law is that it is in the public interest that there should be finality in litigation - interest rei publicae ut sit finis litium. It is only just that no one ought to be vexed twice for the same cause of action - nemo debet bis vexari pro eadem causa. Both maxims are the rationales for the doctrine of res judicata, but the earlier maxim has the further elevated status of a question of public policy.” [6] The scope of the docrine was explained precisely by the English Court in Greehalgh v Mallard [1947] 2 All ER 255, 257 where Sommervell, J remarked: “… res judicata for this purpose is not confined to issues which the Court is actually asked to decide but it covers issues or facts which are so clearly part of the subject matter of the litigation and so clearly could have been raised that it would be an abuse of the Page 14 of 19 process of the Court to allow a new proceeding to be stated in respect of them.” [7] In the Court of Appeal case of Chong Kew v Leow Lay & Ors [2009] 1 CLJ at page 256 Low Hop Beng, JCA held: “(ii) When a matter between two parties has been adjudicated by a court of competent jurisdiction, the parties and their privies are not permitted to litigate once more the res judicata, because the judgment becomes the truth between such parties who should accept it as the truth - res judicata pro veritate accipitur;

(iii) The public policy of the law is that, it is in the public interest that there should be finality in litigation - interest rei publicae ut sit finis litium;

(iv) It is only just that no one ought to be vexed twice for the same cause of action - nemo debet bis vexari pro eadem causa;

Both the aforesaid maxims in (3) and (4) are the rationales for the doctrine of res judicata, but the earlier maxim has the further elevated status of a question of public policy;” Page 15 of 19 [8] It is crucial to reiterate that L44 is not a fresh action that relitigates the issues decided in the original action and calls upon the Court to readjudicate the same issues and cause of action but to properly and effectively implement the terms of the judgment entered for P. The necessity of the application arose only upon the independent auditor’s need to sight necessary documents and/or records to carry out the audit of the two restaurant businesses concerned. This is not an issue that P could be reasonably expected to have anticipated when commencing this action. [9] Further, it important to consider that P through his solicitors, was clearly prompted by necessity to move the Court vide L. 44, bearing in mind that the conduct of D1 and D2 in their reluctance to supply the accounts left P with no alternative. Primarily, D1 and D2 had unreasonably failed and/or refused to respond to P’s queries on the audit fees payable to KF Cheong; and to respond to the request by the auditor for additional documents that were deemed to be necessary to investigate and review the accounts of the two businesses. [10] P brought to the attention of the Court the general reluctance and uncooperative stance on the part of D1 and D2 to facilitate and enable enforcement of the terms of the judgment which were in accordance with Page 16 of 19 the reliefs prayed for in the claim which was also reflected in the Court record of proceedings before the Registrar. Despite several sessions of case management fixed by the Registrar, they did not respond to the appointment of the proposed Independent Auditor. Thereafter, despite having agreed to KF Cheong as the Independent Auditor there was no response to P’s solicitor’s e-mails regarding the payment of deposit to KF Cheong to begin their work. D1 and D2 subsequently showed a similar refusal to respond to KF Cheong’s request for additional documents. [11] Lastly, D raised the issue of the Court being functus officio after having adjudicated the case and delivered judgment. In this regard, it is important to note that when the Court recorded judgment for the Plaintiff in both suits, the Court granted liberty to both parties to appoint an independent auditor to investigate and examine the accounts of both businesses, i.e., Restoran KFC and KFL Food Corner since the formation of the partnership between P and D1 and D2. The process required reference to various documents to ascertain the veracity of the business accounts produced by D1 and D2. Hence, it is not a fresh issue barred from being tried by reason of the Court being functus officio but flowed from the judgment itself and the turn of events, particularly the conduct of D1 and D2 as adverted to, which necessitated the application being made to comply Page 17 of 19 with the terms of the judgment. The documents were clearly not sought by P at their whims and fancies but were deemed vital by the auditors themselves as explained in detail in their correspondence to the parties. According to them, the review and investigation of the accounts as directed by the Court would otherwise fail. Reference may be made to the case of Richland Trade & Development Sdn. Bhd. v United Malayan Banking Corporation Berhad [1996] 4 MLJ 233 where the Court held: “… Even if the various pleas on estoppel and res judicata could validly be raised, in the present circumstances, as justice prescribes that the res judicata or estoppel principles should not be applied on a party who has suffered from the alleged conduct of another, the plaintiffs should not be prevented or shut out from re-opening the issue when it later arose in these proceedings” [12] The above passage is clearly relevant to the present situation brought about by the conduct of D1 ad D2. [13] For the foregoing reasons, I conclude as follows. [14] Upon having considered the grounds in support of L. 44, the history and/or facts of this case, the judgment of this Court pursuant to which L. was commenced and the contentions of both counsel, the Court finds that Page 18 of 19 L. 44 is in order and has a valid basis by virtue of the terms of Order 45, r.6, of the ROC. Inter alia, the Plaintiff has moved this Court pursuant to a proper request for documents by the independent Court appointed auditor whose appointment was mutually agreed to by both parties. The documents appear to be material and necessary for the auditor to carry out his duties properly, effectively and independently in accordance with the terms of the said Court Order. It is not a frivolous and unjustified request. Further, the Defendants, have shown much reluctance to supply the complete set of documents for the auditor to properly ascertain the facts and correct figures on the profits acquired from the businesses to be shared fairly. [15] The question of res judicata and issue estoppel does not arise in respect of L. 44 as it is an application for consequential and necessary orders flowing from the judgment and not to relitigate the issues already decided at the trial. [16] Hence, I find the grounds of objection raised by the Defendants to be without any merits. [17] I, accordingly, grant an Order in Terms of L. 44 with costs with the exclusion of documents already supplied by D1 and D2. Page 19 of 19 [18] Time allowed until the end of January, 2018 to hand over the documents and costs of RM2,000.00 to the Plaintiff. Dated : 12 March 2018 (GUNALAN A/L MUNIANDY) Judge High Court of Malaya Shah Alam COUNSEL: For the Plaintiff : Pn. Zarina Begum Messrs Lim Soh Wan & Zarina Kuala Lumpur For the Defendant : Mr. KY Wong Messrs Farid Wong & Wee Puchong, Selangor