Ong Soo Kwee v Loh Realty Sdn Bhd (WA-28NCC-710-07/2023)

In this Petition, the Petitioner seeks to wind-up Loh Realty Sdn Bhd (“the Respondent”) which is a family company. This Petition is filed pursuant to section 465(1)(h) of the Companies Act 2016 (“CA 2016”).

The basis to wind-up the Respondent is the alleged breakdown in relations between the Petitioner and the other shareholders of the Respondent.

The Petitioner is a registered shareholder of 1,983,333 (49.5%) shares in the Respondent.

As at the date of this Petition, the authorized share capital of the Respondent is RM5,000,000.00 divided into 5,000,000 shares of 1.00 each. The amount of capital paid-up or credited as paid-up is RM4,000,000.00

As at the date of this Petition, the registered shareholders of the Respondent are as set out below: S/N d/v68J3tukiXX/c9z1xoQ **Note : Serial number will be used to verify the originality of this document via eFILING portal 3 Shareholder Number of Share(s) Percentage (%) Khong Kok Yau 295,370 50% Khong Kok Yun 295,730 Ong Cheng Lian 203,704 Ong Ghee Sai 203,704 Ong Giok Pin 203,704 Ong Giok Yan 203,704 Ong Soo Keok (deceased) 611,111 Ong Soo Kwee (Petitioner) 1,983,333 49.5%

The shareholders of the Respondent are presently divided into two factions. The factions consist of:

6.1 Khong Kok Yau, Khong Kok Yun, Ong Cheng Lian, Ong Ghee Sai, Ong Giok Pin, Ong Giok Yan and Ong Soo Keok (deceased) holding 50.5% of shares in Log Realty (’the majority shareholders’) and

6.2 The Petitioner, holding 49.5% of shares in the Respondent. S/N d/v68J3tukiXX/c9z1xoQ BACKGROUND OF THE RESPONDENT [7] The Respondent was founded in 1983 by the late Loh Ah Moy (“LAM”). LAM is the matriarch of the family and the Respondent was founded to carry on the business of a property investment company for the benefit of the children and descendants of LAM (“LAM Family”). [8] The Petitioner and LAM were the first subscribers and original shareholders of the Respondent. The Petitioner and LAM were also the First Directors of the Respondent. LAM was also appointed as the Permanent Director of the Respondent and thus cannot be removed as a Director of the Respondent. [9] Subsequent to the First Directors, on various dates, 3 others (son and grandchildren of LAM) were appointed as Directors of the Respondent, namely:

1.

Ong Soo Keok (Son) (deceased)

12.1983 2.

Khong Kok Yew (Grandchild)

1.1984 3.

Ong Ghee Soon (Grandchild)

1.1986 S/N d/v68J3tukiXX/c9z1xoQ [10] The above 3 persons together with LAM and the Petitioner were Directors of the Respondent until the demise of LAM. After the demise of LAM, the persons set out in the table below were appointed as Directors at various dates. No. Director Date of Appointment 1.

Ong Ghee Sai 7.4.2010

Khong Kok Yau 18.6.2021

4.

Ong Giok Yan (alternate to Ong Giok Pin)

11.2017 [11] Following LAM’s demise in 2001, the Petitioner took over the management of the Respondent. However, the Petitioner was not re-elected as a Director at the Annual General Meeting of the Respondent in 2015 due to the acrimonious relationship between the majority shareholders and the Petitioner. THE BEGINNING OF THE ACRIMONIOUS RELATIONSHIP BETWEEN THE FACTIONS [12] Following the passing of LAM on 25.03.2001, the Petitioner avers that there has been an irreconcilable breakdown in relations between the Petitioner and members of the LAM Family, including the majority S/N d/v68J3tukiXX/c9z1xoQ shareholders. This breakdown of mutual trust and confidence is evidenced by the numerous cases filed by both factions against the other. [13] In 2006, the grandchildren of LAM together with Ong Soo Keok, filed an oppression suit under section 181 of the Companies Act 1965 vide Petition No. D8-26-35-2006 (Oppression Petition) against the Petitioner, one Khong Kok Yew, and the Respondent company. [14] The primary remedy sought for in the Oppression Petition was that the Petitioners’ (the then minority shareholders) shares in the Respondent be purchased by such other persons or members of the Respondent with an alternative remedy that the Respondent be wound up under section 218(1)(i) of the Companies Act 1965. [15] In the Oppression Petition, the current majority shareholders were then minority shareholders (40%). The current Petitioner Ong Soo Kwee, together with Khong Kok Yew (“Khong”) and Ong Chee Sim were then the majority shareholders. [16] The learned Judge of the High Court did not make an order that the then Petitioners’ shares in the Respondent be purchased by the Current Petitioner, Khong Kok Yew and Ong Ghee Sim and neither did S/N d/v68J3tukiXX/c9z1xoQ the learned Judge give the alternative remedy of winding-up of the Respondent.

16.1 In a judgment dated 30.6.2011 in respect of the Oppression Petition (‘Oppression Decision’), the High Court ordered, amongst other things, that (a) the shares of Khong Kok Yew and Ong Ghee Sim (2 of the individual respondents in the Oppression Action) be sold to and purchased by the Petitioners in the Oppression Action, the then minority shareholders; and (b) Ong Ghee Sim was barred from acting as director for misconduct. The appeal of Khong Kok Yew and Ong Ghee Sim against the decision of the High Court was dismissed.

16.2 As a consequence of the sale and purchase order, the current shareholding structure of the Respondent is set out in the table below, the change being that the minority shareholders or Petitioners in the Oppression Petition became the majority shareholders of the Respondent. Shareholder Number of Share(s) Percentage (%) Khong Kok Yau 295,370 7.4 Khong Kok Yun 295,730 7.4 Ong Cheng Lian 203,704 5.1 Ong Ghee Sai 203,704 5.1 Ong Giok Pin 203,704 5.1 S/N d/v68J3tukiXX/c9z1xoQ Ong Giok Yan 203,704 5.1 Ong Soo Keok (deceased) 611,111 15.3 Ong Soo Kwee (Petitioner) 1,983,333 49.5 [17] The significance of the Oppression Decision is that prior to the decision, the majority shareholders in control of the affairs of the Respondent were the Petitioner (49.5%); Khong Kok Yew (4.6%) and Ong Ghee Sim (4.6%). Following the compulsory sale and purchase order made by the learned Judge with respect to the shares of Khong Kok Yew and Ong Ghee Sim, the Petitioner remains and continues to be the largest single minority shareholder of the Respondent at 49.5%. [18] Following the demise of LAM there was an obvious disagreement between the Petitioner and the rest of LAM’s grandchildren in respect of the administration of the estate of LAM which according to the Petitioner led to irreconcilable differences and acrimony between the two (2) factions. [19] There were six (6) suits filed in court over the administration of the estate of LAM. The details can be found in the Petition (Enclosure 1 paragraph 6). S/N d/v68J3tukiXX/c9z1xoQ [20] There are eight (8) legal actions between the parties spread over a period of eighteen (18) years. The Petitioner in September 2021 wrote to the board of directors expressing his interest to wind up the Respondent voluntarily and in 2022, he also offered to dispose of all his shareholdings in the Respondent to the other shareholders. [21] In a letter dated 29.9.2022, the Petitioner made the following offer: Based on the transacted disposal of shares and current available information, I am now offering my entire shareholding to the members of the Company as follows: -

RM6.90 to RM15.00 per share – negotiable. This is on the basis of RM6.90 per share on Peter Khong’s disposal and RM15.00 per share on Ong Soo Keok’s Estate estimated share value of his shares in the Company

(ii) I am also prepared (sic) to consider any payments by instalments for the benefit of the acquirer(s).

(iii) This offer is valid for 30 days and shall expire on the 29.10.2022. S/N d/v68J3tukiXX/c9z1xoQ [22] The response to the Petitioner’s letter of 29.9.2022 from the majority shareholders dated 21.10.2022 was that until and unless land identified as Lot 84 is transferred from the estate of LAM to the Respondent, nothing may be considered. Thus, offer has lapsed. [23] The Petitioner avers that the transfer of Lot 84 is not in the hands of the Petitioner at the material times. Moreover, the Petitioner’s Grant of Probate was revoked on 22.12.2022. THE PETITIONER’S SUBMISSIONS [24] (a) In the Hong Kong case of Leung Cheung Yuk Ying & Leung Kwok Fun & Ors [2007] HKCU 695 [Tab 17 of PBOA2], it was held that when personal animosity and conflicts are closely linked to the affairs of a company and cannot be surgically separated, it is just and equitable to have the company wound up. The Court held at [45]: [45] It is just and equitable that the Company should be wound up. Mutual trust and confidence has completely broken down. It is not possible for the parties to co-operate in an atmosphere of bitterness and suspicion. The personal animosity and conflicts between them are closely linked to the affairs of the Company, so that it is not possible to separate neatly their private affairs from business affairs (Pizem & Anor v Malek & Ors (1985) 3 ACLC 612 at 635). The Company can no longer operate as a family S/N d/v68J3tukiXX/c9z1xoQ company. It should be wound up so that its only asset can be realised for the benefit of its shareholders. This is the fairest solution to them.

The Petitioner submits, on the facts, there cannot be dispute that there is loss of personal trust and mutual confidence between the members of the LAM family. So much was admitted in the Oppression Petition and the acrimony continues to exist up until today. The Petitioner is 81 years old. He is unmarried and has no biological or adopted son. The constitution of the Respondent does not allow transfer to parties outside the LAM family, not even upon demise. He asked for voluntarily winding-up and also that the majority faction buys his 49.5% equity. They refused to purchase his shares in the Respondent. He has no exit from the Respondent given the acrimonious relationship which broke out since the demise of LAM, the matriarch, there has been and a continuing total loss of trust, confidence and good faith between members of the company. There is no alternative remedy but the winding-up of the Respondent to allow parties to part ways. [25] In Tai Hean Leng @ Tek Hean Leng v New Future Capital Sdn Bhd [2018] MLJU 1599 at [37] - [41] [Tab 2 of PBOA]: [37] I am of the view, based on the authorities cited to me, that I do not have to decide whether NFC is a quasi-partnership or not. However, I have to decide whether NFC is a family company where the Petitioner and TMC deal with each other based on a relationship of mutual trust and confidence. And to answer that, I have to decide whether the family S/N d/v68J3tukiXX/c9z1xoQ interest is closely related to the raison d’etre of the company, in other words, whether the family interest is fundamental to the purpose of the company. [39] It cannot be disputed that there is no longer any relationship of trust or confidence between the Petitioner and TMC. Not only are they not on speaking terms, they have made scathing allegations against each other in the Litigation. They just cannot get on with each other. [40] The Court is not asked to determine the rights and wrongs of the various factual allegations made in the Litigation. Rather, the very existence of the serious and wide-ranging allegations in the Litigation demonstrates that there has been an irreconcilable breakdown in the relationship of mutual trust and confidence amongst the members of the Tai family and between the Petitioner and TMC. [41] When relationship between family members has broken down, the court would be ready to wind up the company... [26] The Petitioner submits that his shares are locked in and there is no exit available to him even after his death. Even the executors of his estate would not be able to dispose of his shares in the Respondent due to the peculiar provision in the Respondent’s constitution. The relevant provisions of the Respondent’s constitutions are as below: S/N d/v68J3tukiXX/c9z1xoQ

26.1 Article 32 provides: “Transfer of Shares

Notwithstanding any provision in these Articles a share may only be transferred to the original shareholders or the descendants of the original shareholders.”

26.2 Article 33 provides: “Restriction of Transfer 33. A share may be transferred by a member or other person entitled to transfer (hereinafter called “the transferor”) to any member selected by the transferor but no share shall be transferred to a person who is not a member so long as any member (or any person selected by the directors as one whom it is desirable in the interest of the company to admit to membership) is willing to purchase the same at the fair value.” [27] The effect of Article 32 read with Article 33 is that if any descendants of any member are unwilling to purchase the Petitioner’s shares he will be unable to liquidate his shares and upon his death the other shareholders will be able to distribute his shares amongst themselves without any consideration and thus became unjustly enriched. Further, it also means that the Petitioner during his lifetime may not will away the shares to a non-member of the LAM Family or part with the same as a gift inter vivos to a non-member of the LAM Family. S/N d/v68J3tukiXX/c9z1xoQ THE RESPONDENT’S SUBMISSION AND THE COURT’S FINDING [28] The majority shareholders who together holds fifty one percent (51%) of the issued shares in the Respondent oppose this Petition. The first ground to oppose is framed in the form of a preliminary objection. [29] The majority shareholders submit that this Petition is barred by Res Judicata and issue Estoppel. They submit that the Judge in the Oppression Decision had already decided the issues raised by the Petitioner in this Petition. In their submissions they quoted the grounds of the Judge as follows: “In the present case, it is obvious that there is a mutual distrust between the minorities and the majority shareholder in the Company and that the confidence of one faction in the other has broken down. However, it is also important to note that the company is solvent. There is no evidence before the Court to suggest that the Company is in any sort of financial difficulties. The Company is also a family based company whose business is predominantly property management company and the main income is from the rentals of the Company’s properties. In the circumstances, it will not be wise or in the best interest of all parties to have the Company wound-up. The other alternative therefore is to have one party purchase the shares of the other party. [30] Thus, they submit that based on the above grounds the Judge had decided as follows: i. The Company (the Respondent) is solvent; ii. There is no evidence that the Company is in financial difficulties; S/N d/v68J3tukiXX/c9z1xoQ iii. The Company is a family-based company and its main income comes from the rentals of the Company’s assets; and iv. It is not in the best interest of the Company to have it wound up [31] The majority shareholders submit that since the Judge had decided in the Oppression Petition that it is not in the best interest to wind-up the Respondent, therefore the current Petition is an attempt by the Petitioner to relitigate the issues already decided by the Court in the Oppression Petition. [32] I find this submission by the majority shareholders to misconceived for the following reasons:

The Oppression Petition was filed by different parties, i.e. the current majority shareholders and that Petition was based on oppressive conduct by the Respondents in that Petition. However, the current Petition is filed on the basis of “just and equitable principles under a different provision of the CA 2016. Thus, the tests applicable for the Oppression Petition is totally different from the test applicable for the current Petition.

(ii) The facts relied on in the current Petition are based on new facts which was not in issue for the Oppression Petition. S/N d/v68J3tukiXX/c9z1xoQ

(iii) The time to determine and examine the facts whether it is just and equitable to wind up a company and appoint a liquidator, is the state of affairs of the Respondent prevailing as at the date of filing of this Petition, which is the year 2023, whereas the Oppression Petition was filed in the year 2006. Additionally the remedies available to the Judge in the Oppression Petition is broader than that provided by section 465(1)(h) of the CA 2016.

(iv) In Auspicious Journey Sdn Bhd v Ebony Ritz Sdn Bhd & Ors [2021] 4 CLJ 721 (FC), Nallini FCJ at [151] [Tab 20 of PBOA2] held: A court determining an oppression claim is not bound by the reliefs the petitioner prefers or insists on, but is at liberty to fashion the remedy in accordance with the factual matrix of the case. The remedy granted would depend on the complaint and the circumstances prevailing at the time of the hearing, not at the start of the proceedings; see Re Via Servis Ltd; Skala v Via Servis Ltd [2014] All ER (D) 180 at [80] and Re Hailey Group Ltd [1993] BCLC 459 at 473.

The time to determine and examine the facts whether it is just and equitable to wind up a company in the current Petition is the prevailing state of affairs of the Respondent Realty as at the date of hearing of this Petition and not at the date of circumstances which occurred during more than 17 years earlier. The S/N d/v68J3tukiXX/c9z1xoQ Oppression Decision must be read in the context of its facts. In the Oppression Petition, the Judge was not encountered with the same factual matrix as the current Petition. [33] The majority shareholders also submits that their refusal to purchase the Petitioner’s share cannot warrant a winding-up of the Respondent. They submit that the Petitioner cannot be allowed to benefit from his own wrongdoing, thus the Petitioner did not come to court with clean hands. I find this submission to be misconceived for the reason that they already obtained their remedy in the Oppression Petition and that the Petitioner’s alleged wrong doing was based on events which occurred more than 10 years earlier and has no significance to the current Petition which is based on a totally different set of facts and cause of action. [34] The majority shareholders further submit that the Petitioner has not pleaded that the Respondent is a quasi-partnership. They submit that the presence of quasi-partnership is essential to a winding-up Petition on just and equitable ground. They also submit that there is no deadlock in the Board of Directors levels. [35] Likewise I find these two submissions to be misconceived. The Court of Appeal in the case of WTK Realty Sdn Bhd v Kathryn Ma Wai Fong (2024) MLJU 808 held that Lord Wilberforce in Ebraimi v Westbourne Hallaries Ltd, did not propose that mutual trust and S/N d/v68J3tukiXX/c9z1xoQ confidence can only be found in quasi-partnership cases. The court held that it was a question of fact if trust and confidence is lost. If a member cannot take his stake and go elsewhere it is just and equitable to wind-up a company (see paragraph 13 and 37 of the grounds of Judgment of the COA. I find the current Petition is identical to the factual matrix in the WTK Realty case cited above, since WTK Realty case also involve a family company which restricts the transfer of shares. [36] The case of WTK Realty also held that the absence of deadlock did not prevent the Respondent Company from being wound-up on just and equitable principles (see paragraphs 67 and 68 of the grounds of judgment). [37] In such factual reality and circumstances, it would be grossly unjust that his substantial assets (49.5%) should remain unavailable to the Petitioner and remain unjustly and inequitably locked in the Respondent. The irresistible and natural conclusion is that the majority shareholders are inequitably expecting that upon the Petitioner’s demise, his substantial assets accrue or pass to them as the descendants of LAM. This is confiscation and this could never had been intended by LAM and the Petitioner as co-founder of the Respondent. For the above reasons I find it is just and equitable that the Respondent be wound-up. S/N d/v68J3tukiXX/c9z1xoQ [38] For the reasons aforesaid I allow the prayers in this Petition with costs to be paid to the Petitioner out of the proceeds of the Respondent’s assets. Dated 10 April 2025 …………t.t….……………. Ahmad Murad Bin Abdul Aziz Judge High Court of Malaya Kuala Lumpur COUNSEL FOR THE PETITIONER: LOH SIEW CHEANG WITH CLAUDIA NYON AND GOH EE VON SOLICITORS FOR THE PETITIONER: TETUAN TAI, PING & CO COUNSEL FOR THE RESPONDENT: CHRIS LIM SU HENG WITH SIVANESAN SOLICITORS FOR THE RESPONDENT: TETUAN CHRIS LIM SU HENG Cases Referred to: - ➢ Leung Cheung Yuk Ying & Leung Kwok Fun & Ors [2007] HKCU 695 ➢ Tai Hean Leng @ Tek Hean Leng v New Future Capital Sdn Bhd [2018] MLJU 1599 ➢ Auspicious Journey Sdn Bhd v Ebony Ritz Sdn Bhd & Ors [2021] 4 CLJ 721 ➢ WTK Realty Sdn Bhd v Kathryn Ma Wai Fong (2024) MLJU 808 S/N d/v68J3tukiXX/c9z1xoQ Legislation Referred to: ➢ Companies Act 2016 Decision date: 16 August 2024 S/N d/v68J3tukiXX/c9z1xoQ