Mohamed Zahid Yon Bin Mohamed Fuad v 1. Yakub Bin Hussaini (WA-24NCC-399-07/2019)

YAKUB BIN HUSSAINI (No. K/P: 730414-13-5859)

FAT BOYS RECORDS SDN BHD (No. Syarikat: 529600-T) ... DEFENDAN-DEFENDAN JUDGMENT [Enclosure 20] [1] This application was made pursuant to section 346 of the Companies Act 2016 for certain remedies in respect of allegations of oppression. [2] As a matter of procedure, and as indicated in the intitulement, the originating process adopted was pursuant to Order 7 of the Rules of Court 2012 (“ROC”) as prescribed under Order 88 of the ROC i.e. by way of an originating summons. 2 2nd Defendant’s application [3] On the 24th of September 2019, the 2nd Defendant filed a Notice of Application (“Enclosure 20”) seeking several orders under Order 28 Rule 8 of the ROC. [4] The Originating Summons was already fixed for hearing on the 25th of September 2019 by the learned Timbalan Pendaftar on the 8th of August 2019. Therefore, Enclosure 20 was filed well after a hearing date for the Originating Summons had been given and merely a day before the hearing date fixed. In the circumstances, the hearing of Enclosure 20 was fixed for the 25th of September 2019 as any later date would render the application otiose. Even to fix Enclosure 20 for a case management on the 25th of September 2019 would be quite pointless if the hearing of the Originating Summons were to proceed as scheduled. [5] In Enclosure 20, the 2nd Defendant sought one of two alternative sets of orders. The first was to have the Originating Summons proceed as if the cause or matter had been commenced by way of a writ and that the hearing date fixed for the Originating Summons be adjourned pending appropriate directions to be given, including directions for pleadings. [6] The second, in the alternative, were orders sought for the affidavits filed to be treated as pleadings and that the parties be given liberty and time to add or amend the cause papers or to apply for particulars. 3 [7] The Plaintiff was a shareholder and director of the 2nd Defendant. The Plaintiff’s complaints of oppression in this Originating Summons were directed at the 1st Defendant and one individual by the name of Jason Lo. Both the 1st Defendant and Jason Lo were directors of the 2nd Defendant while the 1st Defendant was also a shareholder of the 2nd Defendant. [8] The said Jason Lo was not made a party to this Originating Summons although he had a pending application to intervene and to be added as a party. [9] As regards the 2nd Defendant, it had only two shareholders namely the Plaintiff and the 1st Defendant and three directors namely, the Plaintiff, the 1st Defendant and the said Jason Lo. [10] The 2nd Defendant’s application was supported by an affidavit affirmed by Jason Lo as a director of the 2nd Defendant. It was contended in this affidavit that there were several issues of fact that were in dispute. Among them were whether the 2nd Defendant itself had an issued and paid up share capital of RM1,000,000.00, whether the 1st Defendant held any shares in trust for Jason Lo, whether dividends were distributed to the 1st Defendant, whether Jason Lo had harassed the Plaintiff and the employees of the 2nd Defendant, whether the Plaintiff was responsible for the management of the 2nd Defendant by himself or by close consultation with Jason Lo and whether there was oppression against or prejudice caused to the Plaintiff. Also set out was a breakdown of subsidiary issues in dispute relating to those contentions. 4 [11] In the 2nd Defendant’s affidavit in support of its application Jason Lo also stated that there were a few facts that were not consistent in the Plaintiff’s affidavit. In the circumstances it was contended that it would be more appropriate, necessary even, for the Plaintiff to be cross-examined. [12] It does seem somewhat out of the ordinary that the company itself was taking an active role in this proceeding. Normally, in proceedings under section 346 of the Companies Act 2016, the company itself would adopt a passive stance. Allegations of oppression would invariably be against individuals within the company and anyone who had any relevant evidence to provide may do so by way of an affidavit. Be that as it may, this is not an issue of concern for the Court at this juncture of the proceeding but is alluded to as the application was made by the 2nd Defendant, the company. [13] Based on the 2nd Defendant’s affidavit, the concern that the 2nd Defendant had was in essence that there were issues of fact raised in the Plaintiff’s affidavits in respect of which there was a need to cross-examine the deponent. [14] However, to my mind, to achieve this, there was no need to continue the proceedings as if it was begun by way of a writ action. Doing so would require directions for pleadings or have the affidavits filed stand as pleadings. [15] It is now quite clear that having affidavits stand as pleadings is often not the most appropriate way to proceed. Affidavits contain evidence and often consists of long narratives with details supporting or 5 resisting the application before the Court. Often, arguments are also included in affidavits. Affidavits are not limited to being statements of material facts disclosing a party’s claim or defence, as are pleadings in a writ action. Rather than to present succinctly, and with focused clarity, the gravamen of a party’s claim or defence, affidavits are meant to provide the evidential basis in support of them. In the words of the learned authors of the Malaysian Civil Procedure 2018, Vol 1, in page 405 at paragraph 28/8/1: “It appears that the better practice is not to direct that affidavits stand as pleadings. As a matter of practice, affidavits cannot be amended nor can particulars of them be ordered usually. Since affidavits by their very nature amount to evidence, this also goes against one of the cardinal rules of pleading that only material facts and not evidence be pleaded.” [16] If affidavits ought not to be made to stand as pleadings, directions would then have to be given for a statement of claim and defences to be filed. This would have to be followed by directions for witness statements and the filing of bundles of documentary evidence. All this would invariably incur further time and costs. Such, to my mind and in the circumstances of this case, would not be compatible with the objective of achieving an expeditious and economical disposal of the action or, indeed, was necessary to secure a just disposal of it. [17] If what concerned the applicant, as deposed to in its affidavit, were disputed matters set out in affidavits filed by the Plaintiff, then Order 28 Rule 4 of the ROC should be invoked for leave to cross-examine the deponent. There was no need to convert the whole process into a writ action just to be able to cross-examine a deponent on his affidavit. 6 [18] The powers of the Court under Order 28 Rule 4 are very wide as can be seen provided in paragraphs (3) and (4): “Directions by Court (O. 28, r. 4)

4.

… …

Without prejudice to the generality of paragraph (2), the Court shall, at as early a stage of the proceedings on the originating summons as appears to it to be practicable, consider whether there is or may be a dispute as to fact and whether the just, expeditious and economical disposal of the proceedings can accordingly best be secured by hearing the originating summons on oral evidence or mainly on oral evidence and, if it thinks fit, may order that no further evidence shall be filed and that the originating summons shall be heard on oral evidence or partly on oral evidence and partly on affidavit evidence, with or without cross-examination of any of the deponents, as it may direct.

Without prejudice to the generality of paragraph (2), and subject to paragraph (3), the Court may give directions as to the filing of evidence and as to the attendance of deponents for cross-examination and any other directions.” (Emphasis added) [19] In a modern day trial where witness statements are used, there is practically no difference between the cross-examination of a witness on his witness statement in a writ action and the cross-examination of a deponent on his affidavit in proceedings commenced by way of an originating summons. If indeed the originating summons were to be continued as if it was commenced by way of a writ, all witnesses would have to tender oral evidence when what may be required is merely the cross-examination of only certain deponents on their affidavits. This, again, would not contribute to an expeditious and economical disposal of the action. 7 [20] It should also be borne in mind that Order 88 of the ROC caters specifically for proceedings brought under the Companies Act. Although Order 88 Rule 1 of the ROC provides that the term “the Act” means the Companies Act 1965 (Act 125), that statute has since been repealed by the Companies Act 2016 (Act 777). On this, the learned authors of the Malaysian Civil Procedure 2018, Vol 1, at page 1200 under paragraph 88/0/2, observed: “Editorial Introduction RC 2012 Order 88 regulates proceedings made under the Companies Act 1965 (Act 125), which has since been repealed by the Companies Act 2016 (Act 777). Pending an amendment to Order 88, for all intents and purposes, Order 88 ought to be taken as encompassing proceedings under the Companies Act 2016. All references to the Companies Act 1965 and the relevant provisions ought to be construed as references to the Companies Act 2016 and the corresponding provisions.” [21] In my view it is within the inherent jurisdiction of the Court to recognise or treat as applicable Order 88 of the ROC to proceedings brought under the Companies Act 2016. The Court has, within its residual powers pertaining to adjectival law, the inherent jurisdiction to ensure that there exists a just process to facilitate proceedings brought before it under the Companies Act 2016. As Sir Jack Jacob described in his paper “The Inherent Jurisdiction of the Court” (1970) 23 CLP 23, the Court’s inherent jurisdiction is the: 8 “[…] residual source of powers, which the court may draw upon as necessary whenever it is just or equitable to do so, in particular to ensure the observance of the due process of law, to prevent vexation or oppression, to do justice between the parties and to secure a fair trial between them. [22] In Ann Joo Steel Bhd v Pengarah Tanah Dan Galian Negeri Pulau Pinang & Anor and Another Appeal [2019] 9 CLJ 153 at p169, the following passage of Sir Jack Jacob’s paper “The Inherent Jurisdiction of the Court” was referred to by the Federal Court and which passage is of relevance to the case at hand: “ If the jurisdiction to exercise these powers was derived, not from any statute or rule of law, but from the very nature of the court as a superior court of law, and for this reason such jurisdiction has been called “inherent”. This description has been criticised as being “metaphysical”, but I think nevertheless that it is apt to describe the quality of this jurisdiction. For the essential character of a superior court of law necessarily involves that it should be invested with a power to maintain its authority and to prevent its process being obstructed and abused. Such a power is intrinsic in a superior court; it is its very life-blood, its very essence, its immanent attribute. Without such a power, the court would have form but would lack substance. The jurisdiction which is inherent in a superior court of law is that which enables it to fulfill itself as a court of law. The juridical basis of this jurisdiction is therefore the authority of the judiciary to uphold, to protect and to fulfil the judicial function of administering justice according to law in a regular, orderly and effective manner.” (Emphasis added) 9 [23] If Order 88 of the ROC is not recognised or regarded as applicable to applications made under the Companies Act 2016, there would be no procedural facility to accommodate proceedings under that Act. Such would clearly collide with the Court’s judicial function of administering justice according to law in an orderly and effective manner, and would impede the fulfillment of the role of a Court of law. [24] As a matter of practice, Order 88 of the ROC is currently being used by litigants in our Courts as the only source of adjectival law for proceedings under the Companies Act 2016. [25] Order 88 Rule 2 states specifically that all proceedings under the Companies Act 1965, other than those specified in Appendix C to the ROC relating to the winding up of companies and capital reduction, “…shall be commenced by originating summons”. Appendix C, which was amended in 2018 (PU(A)24/18 of 1st March 2018) does, interestingly enough, make reference to the Companies Act 2016. Proceedings brought under section 181 of the Companies Act 1965 in cases of alleged oppression, and now under section 346 of the Companies Act 2016, do not fall within Appendix C and are therefore to be commenced by way of originating summons. [26] As Order 88 is a specific provision catering for proceedings under the Companies Act, it is my view that Courts should be slow to exercise its discretion under the general provision found in Order 28 Rule 8 of the ROC to treat or continue proceedings that are specifically required to be commenced by originating summons, as if it was begun by way of a writ. Courts should only do so if it is necessary to ensure a just disposal of the action. 10 [27] It may be quite different if there was a need to subpoena unwilling witnesses from whom affidavits cannot be secured. If that be the case, and the testimony of such witnesses are relevant, it may well warrant continuing the originating summons as if it were begun by way of a writ. Such, however, was not the problem in the present case. [28] In light of the foregoing, I did not see the necessity for converting this proceeding to one as if it had been commenced by way of a writ in order to accommodate the 2nd Defendant’s concerns. In the circumstances, the 2nd Defendant’s application in Enclosure 20 was dismissed with costs in the cause. Dated this 8th Day of November 2019 -SGD- (DARRYL GOON SIEW CHYE) Judge High Court of Malaya Kuala Lumpur (Commercial NCC 3) COUNSEL FOR THE PLAINTIFF Alan Wong Teck Wei (Zulkifli Jafar with him) (Messrs Rashid Zulkifli D2-5-5, Block D, Solaris Dutamas No. 1, Jalan Dutamas 1 50480 Kuala Lumpur. Tel: 03-6207 9849 / Fax: 03-6207 9848 Emel: info@rashidzulkifli.com). 11 COUNSEL FOR THE 1ST DEFENDANT Nur Eleena (Lee Hoe Leong with her) Messrs HL Lee & Co No. 34, 3rd Floor Jalan SS19/1D 47500 Subang Jaya, Selangor. Tel: 03-5634 1988 / Fax: 03-5634 1788 Emel: hoe.leong@hllee.com). COUNSEL FOR THE 2ND DEFENDANT / APPELLANT Alfred Chong (Messrs A. Chong & Co B-11-09, Trefoil @ Setia City No. 2, Jalan Setia Dagang AH U13/AH, Setia Alam Sekysen U13 40170 Shah Alam, Selangor Tel: 03-50359473 / 0176036066 Emel: alfredchong@achong.co ). CASES CITED  Ann Joo Steel Bhd v Pengarah Tanah Dan Galian Negeri Pulau Pinang & Anor and Another Appeal [2019] 9 CLJ 153 at p169  Genisys Intergrated Engineers Pte Ltd v UEM Genisys Sdn Bhd [2008] 6 MLJ 237  Lim King Kow v Indra Kemajuan Sdn Bhd & Ors [2010] 8 MLJ 831  Owen Sim Liang Khui v Piasau Jaya Sdn Bhd & Anor [1996] 1 MLJ 113  Pan-Pacific Construction Holdings Sdn Bhd v Ngiu-Kee Corporation (M) Bhd & Anor [2010] 6 CLJ 721  Re Five Minute Car Wash Service Ltd [1966] 1 All ER 242  Re Kong Thai Sawmill (Miri) Sdn Bhd; Kong Thai Sawmill (Miri) Sdn Bhd & Ors & Ling Beng Sung [1978] 2 MLJ 227  Soh Jiun Jen v Advance Colour Laboratory Sdn Bhd & Ors [2010] 5 MLJ 342  Tan Tung Kwok v Lau Kah Hing & Ors [2019] 1 LNS 891  Tob Chee Hoong v Tob Chee Choong & Ors [2017] 1 LNS 1256  Verghese Mathai v Telok Plantations Sdn Bhd & Ors [1988] 3 MLJ 216  Wong Kim Yoon v Cheong Kim Hong & Ors [2019] 1 LNS 1004  WTWT Sdn Bhd v Chew Meu Jong & Ors And Another Case [2018] 1 LNS 1458 12 LEGISLATION AND LEGAL TEXT CITED  Section 346 of the Companies Act 2016  Order 7 of the Rules of Court 2012 (“ROC”)  Order 28 Rule 9 Rules of Court 2012  Malaysian Civil Procedure 2018, Vol 1