Mustaria Sdn Bhd v Wu Nah Yoh @ Woo Hin Wai (BA-12ANCvC-53-10/2025)

This judgement arises from an appeal against the ruling of the learned Sessions Court Judge, who allowed the Respondents’ application to strike out the Appellant’s Writ of Summons and Statement of Claim. The Appellant submits that the Sessions Court Judge erred both in law and fact in summarily dismissing the claim. It is contended that the dismissal was improper and that the Appellant’s cause of action warranted full trial. The central question is whether the Sessions Court Judge correctly exercised it’s judicial discretion in striking out the Appellant’s pleadings and should the decision of the Sessions Court be set aside.

In addition, this Court must determine whether the Appellant’s claim against the Respondents, who served as directors of Wujaya Holdings Sdn Bhd (now wound up), discloses a reasonable cause of action. Alternatively, the question is whether the claim constitutes a plain and obvious case warranting summary dismissal.

The Appellant, Mustaria Sdn Bhd, obtained a judgment against Wujaya Holdings Sdn Bhd in the sum of approximately RM498,490.90. Following the winding-up of Wujaya Holdings Sdn Bhd, the Appellant commenced fresh proceedings against the Respondents in their personal capacities. The Respondents, who were directors of Wujaya Holdings Sdn Bhd during the material period, are alleged to have siphoned company funds and withdrawn substantial amounts, specifically RM516,000.00 as remuneration and RM2,800.00 as advances for their personal benefit between 2014 and 2019, notwithstanding the company’s outstanding debt owed to the Appellant pursuant to the earlier judgment.

The Appellant further alleged that these withdrawals were effected notwithstanding the Respondents’ knowledge of the company’s outstanding debt owed to the Appellant pursuant to the earlier judgment. The Sessions Court, upon application by the Respondents, struck out the Appellant’s Writ of Summons and Statement of Claim. The Appellant now appeals against that decision, contending that the learned Sessions Court Judge erred in law and fact by summarily dismissing the claim.

The Appellant maintains that the case remains in dispute and that its claim cannot properly be dismissed as a mere “fishing expedition.” It is argued that the allegations advanced against the Respondents, namely the siphoning of company funds and the withdrawal of substantial sums for personal benefit raise triable issues which warrant judicial examination. In light of these disputed facts, the Appellant argues that it is entitled to a full trial at which evidence may be adduced and tested, thereby enabling the Court to determine the veracity of the allegations and the extent of the Respondents’ liability. In essence, the Appellant contends that summary dismissal at this stage would be premature and unjust, as it would deprive the Appellant of the opportunity to prove its case through the ordinary processes of trial.

The Respondents contend that the Appellant’s claim amounts to an impermissible attempt to circumvent the doctrine of separate legal personality, a fundamental principle of company law which shields directors and shareholders from personal liability for the debts of the corporation. They argue that the Appellant has failed to plead material facts with sufficient particularity to establish any recognised exception to this principle. In particular, the Respondents submit that the pleadings do not disclose fraud, misrepresentation, or misuse of the corporate structure with the requisite precision. On this basis, they maintain that the Appellant’s claim is legally unsustainable and was correctly struck out by the Sessions Court.

The Respondents further argue that the Appellant’s proper recourse lies within the framework of the formal insolvency process prescribed under the Companies (Winding-Up) Rules 1972. They submit that the statutory scheme provides the appropriate mechanism for creditors to pursue recovery against a wound-up company, and that the Appellant’s attempt to proceed directly against the directors in their personal capacities constitutes a circumvention of that process. The Respondents emphasise that no findings of misconduct have been made by the Insolvency Department in relation to their conduct as directors, and in the absence of such findings, the present action amounts to an abuse of the court’s process. Accordingly, they contend that the Sessions Court was correct in striking out the Appellant’s claim. ISSUES BEFORE THE COURT. The Sessions Court judge’s decision

Upon the facts duly presented before the learned Sessions Court Judge, and in the exercise of judicial discretion conferred within the ambit of his lawful authority, an order was issued directing that the matter be struck out. The judgment was founded upon findings which the Sessions Court deemed material and dispositive, and which now fall to be determined by this Court in the course of this Appeal. The said findings, as recorded, are enumerated as follows: a) That the Appellant’s claim was struck out on the grounds of being frivolous, vexatious, scandalous, or otherwise constituting an abuse of the process of the Court; b) That the corporate veil ought not to be lifted in the circumstances of the case; c) That the pleadings filed were insufficient in law to warrant the conduct of a trial; d) That there existed no proper legal recourse available to the Appellant within the framework of the applicable law." In essence, this court must now determine the following: - a. Whether the Appellant’s claim should be struck out The primary issue for determination by this court, is whether the Sessions Court correctly allowed the Respondent’s application to strike out the Appellant’s Writ of Summons and Statement of Claim. This court must determine if the claim is frivolous, vexatious, scandalous, or an abuse of the court’s process, and whether it is plain and obvious that the claim is unsustainable. b. Whether the corporate veil should be pierced This court must decide if the Appellant has pleaded sufficient material facts to justify piercing the corporate veil of Wujaya Holdings Sdn Bhd. This involves determining whether the Respondents, as the directors, used the company as a disguise or sham to commit fraud, dishonesty, or unlawful acts, thereby rendering them personally liable for the company’s debts. c. Sufficiency of pleadings In addition, this court must decide whether the Appellant’s Statement of Claim provides sufficient particulars to disclose a complete cause of action. The Respondents contend that the allegations regarding unauthorized payments, director remuneration, and unjust enrichment are conclusory, lack specific details such as dates, and constitute a fishing expedition. d. Proper legal recourse for the Appellant Finaly, the court must deliberate whether the Appellant is attempting to circumvent the established corporate insolvency process. The Respondents argue that because the company has already been wound up, the Appellant’s proper remedy is to pursue its claim through the liquidator and the insolvency process, rather than initiating a separate personal action against the directors.

The legal position governing the striking out of pleadings is under Order 18 Rule 19(1) of the Rules of Court 2012. Pursuant thereto, the Court is vested with discretionary authority, exercisable at any stage of the proceedings, to strike out or amend any pleading or endorsement of writ upon satisfaction of the prescribed grounds, namely:

absence of a reasonable cause of action or defence;

(ii) pleadings that are scandalous, frivolous, or vexatious;

(iii) pleadings that may prejudice, embarrass, or delay the fair trial of the action; or

(iv) pleadings amounting to an abuse of the process of the Court. Analysis of the Grounds of Appeal by this court

In my opinion, the power to strike out a pleading is recognized as a draconian measure, to be exercised sparingly and only in plain and obvious cases where the claim is manifestly unsustainable. In considering such an application, the Court must proceed on the basis that the facts pleaded in the Statement of Claim are assumed to be true. The jurisdiction to strike out is not intended to shut out litigants from pursuing their claims unless it is clear beyond doubt that the action is frivolous, vexatious, scandalous, or otherwise an abuse of the process of the court. Where the pleadings disclose a reasonable cause of action or raise triable issues of fact, the proper course is to allow the matter to proceed to trial so that the evidence may be tested in the ordinary way.

In the case of Bandar Builder Sdn Bhd & Ors V. United Malayan Banking Corporation Bhd [1993] 47 wherein the Supreme Court held as follows: “[1] The principles upon which the Court acts in exercising its power under any of the four limbs of O. 18 r. 19(1) Rules of the High Court 1980 are well settled. It is only in plain and obvious cases that recourse should be had to the summary process under this rule. This summary procedure can only be adopted when it can be clearly seen that a claim or answer is on the face of it obviously unsustainable”.

I agree with the Appellant that in the case of SME Development Bank Malaysia Berhad v. Sigma Pelangi Systems Sdn Bhd [2016] 1 LNS 943, the Court of Appeal reaffirmed the principles governing striking-out applications. Such applications proceed on the basis that the pleaded facts are assumed true, even if not admitted. The Court emphasised that striking out is a summary process to be exercised sparingly, reserved for cases where the cause of action is clearly and obviously unsustainable. A claim should not be struck out if the statement of claim discloses a reasonable cause of action, however weak, and if there is any prospect of success, the plaintiff must be allowed to proceed.

The Court may permit striking out only where it is satisfied that the claimant has no real prospect of succeeding or the defendant has no real prospect of defending. Where factual disputes exist, or where issues require resolution through discovery or cross-examination, the Court held that striking out is inappropriate, as the plaintiff is entitled to a full hearing to prove the claim. Corporate veil ought to be pierced

In considering whether the corporate veil ought to be pierced, this Court observes that allegations of fraud, dishonesty, or abuse of the corporate structure are not matters suitable for summary disposition. Such claims cannot be resolved on affidavit evidence alone, but instead demand the procedural safeguards of discovery and the rigorous testing of evidence through cross-examination. The question of whether a company has been employed as a mere façade or sham to evade legal obligations requires full ventilation at trial, where the credibility of witnesses and the weight of the evidence may be properly assessed.

It is only by subjecting the facts to the adversarial process that the Court may properly ascertain whether the corporate personality has been misused in a manner warranting judicial intervention. Accordingly, the Court must hold that these issues need to proceed towards trial, where the plaintiff is entitled to establish its case through the ordinary evidentiary mechanisms of the law. Proper legal recourse for the Appellant

In my view, the Respondents’ contention that the Appellant’s remedy lies exclusively within the insolvency process is misconceived. Such an argument fails to account for the distinct and independent liability that may attach to directors in respect of breaches of fiduciary duty and fraudulent conduct. The existence of a judgment against the Company does not, as a matter of law, extinguish or preclude the right of a creditor to pursue a separate cause of action against directors for their personal wrongdoing.

There are circumstances in which directors, by their conduct, occasion loss to creditors, and in such cases, they may properly be held personally accountable notwithstanding the separate legal personality of the corporation. To hold otherwise would be to permit directors to shield themselves behind the corporate entity and thereby evade responsibility for misconduct, a proposition wholly inconsistent with established principles of company law and the fiduciary duties that attach to their office. Sufficiency of pleadings

At this juncture, it must be emphasised that any perceived vagueness in the pleadings does not, of itself, render the claim plainly and obviously unsustainable so as to justify the drastic remedy of striking out. I am satisfied that the Appellant has adequately pleaded material facts concerning the alleged siphoning of funds and breach of duty. The law makes it clear that striking out is a summary process, to be exercised sparingly, and only in the clearest of cases where the cause of action is demonstrably untenable.

Where the particulars of a pleading are thought to be inadequate, the proper course is not to dismiss the action in its entirety, but rather to seek further and better particulars or to allow amendment. To strike out a claim in such circumstances would be to deny the Appellants the opportunity to ventilate its case, contrary to the principle that arguable claims should proceed to trial for determination on their merits.

The Appellant asserts that the particulars contained in the Statement of Claim are, at present, sufficiently plain and complete, and this Court accepts that position. The Respondents’ allegation of incompleteness does not, in itself, render the claim defective. In any event, the procedural rules afford the Appellant the continuing right to amend the particulars prior to the commencement of trial. Thus, even if the Respondents’ contention were later substantiated, the Appellant would suffer no prejudice, as the Court retains discretion to permit amendment to ensure that the pleadings remain comprehensive and accurate.

In my opinion, the Appellant’s case rests upon several factual assertions which, if established, disclose serious triable issues. First, it is alleged that the Respondents, in their capacity as directors of Wujaya Holdings Sdn Bhd, breached their fiduciary duty by failing to ensure compliance with the Company’s obligation to remit fifty percent of the sale proceeds to the Appellant.

Secondly, the Appellant contends that between 2014 and 2019, the Respondents siphoned or transferred substantial sums to themselves, including advances and directors’ withdrawals, notwithstanding the Company’s indebtedness to the Appellant. Thirdly, the Appellant asserts that the Respondents were unjustly enriched by these withdrawals, deriving personal benefit while the Company failed to satisfy the judgment debt.

Fourthly, it is alleged that the Respondents acted with intent to prejudice the Appellant, deliberately frustrating the enforcement of the judgment debt and finally, the Appellant maintains that the Respondents failed in their duty to ensure that the Company discharged its payment obligations when it had the means to do so. Taken together, these allegations, if proven, may give rise to personal liability on the part of the Respondents and justify the lifting of the corporate veil. They are not matters that can be dismissed summarily, but rather require full ventilation of evidence at trial.

I therefore find that the learned Sessions Court Judge erred in failing to appreciate that the Appellant’s claim, discloses serious triable issues concerning the conduct of the directors and the potential piercing of the corporate veil. Such matters are not amenable to summary dismissal, for they require the full ventilation of evidence at trial. By striking out the claim at a preliminary stage, the Sessions Court deprived the Appellant of the opportunity to establish its case through discovery and cross-examination, contrary to the principle that arguable claims must be determined on their merits.

The law is clear that where allegations of director misconduct and abuse of the corporate structure are raised, the Appellant is entitled to its day in Court, and summary disposal is inappropriate. For the reasons set out above, the appeal is allowed with costs and the order of the Sessions Court is accordingly set aside. The matter is remitted for trial with a different Session Court judge, so that the issues raised may be determined upon the proper ventilation of evidence and in accordance with the ordinary processes of law. Date : 4th May 2026 SGD SHOBA DORAI RAJAH JUDICAL COMMISSIONER SHAH ALAM HIGH COURT Solicitor for the Appellant: MAUREEN ONG SWEE KIN [MESSRS LOW & K.H. BOO] Solicitor for the Respondents: COLIN ANAK VICTOR GEORGE [MESSRS COLIN VICTOR & CO.]