Ooi Boon Seong v Plot Design Sdn Bhd (WA-28NCC-1153-12/2024)

Plot Design Sdn Bhd is a company set up by the Petitioner and Tan Su Cheng for the purpose of investment holding. The Petitioner and Tan Su Cheng each hold 100,000 shares in the company and are directors in the company.

The company was used to purchase a bungalow in Bangsar having the title bearing number HS(D) 21420, PT No. 34894, Mukim Kuala S/N 6gujrdYWcECMogOlFK76aw Lumpur, District and State of Kuala Lumpur with an address at No. 158, Jalan Maarof, Taman Bandaraya, 59100 Kuala Lumpur.

The said bungalow was purchased utilizing a loan from Public Bank Berhad. The affidavits filed by the parties show that the company had failed to pay the sums that are due to Public Bank. This caused the said Bank to institute foreclosure proceedings. However, fortunately the Petitioner managed to obtain a purchaser for the said property and was sold for the sum of RM 8.3 million. B. Dispute Between the Petitioner and Tan Su Cheng 4. The affidavits filed before this Court show that there is an ongoing dispute between the Petitioner and Tan Su Cheng. The dispute relates to the affairs of this company and other companies within their repertoire.

This breakdown in the relationship between them started since

This allegedly caused a breakdown in the business of the company and led to the deadlock and stalemate in the management of the company’s business. This can be seen in the failure of the company to appoint an external auditor to audit and file the required accounts by the S/N 6gujrdYWcECMogOlFK76aw Companies Commission of Malaysia. The audit has not been done since the financial year 2021.

The two shareholders also could not agree on the appointment of solicitors to defend the civil suit and foreclosure proceedings instituted by Public Bank Bhd in the claim no WA-22NCC-49-01/2020 and WA-24FC- 350-03/2020. Parties had also disagreed with regard to the affairs of the company which eventually led to the application by Tan Su Cheng to appoint a Judicial Manager over the company in the suit number WA- 28JM-11-03/2020. This Judicial Management process had also failed as parties could not agree to the proposals made with regard to the affairs of the company and the price offered for the said bungalow. The Judicial Management process lapsed and did not bear any fruit.

The said Tan Su Cheng had also caused PDI Design & Associates Sdn Bhd to claim that the shares in the Respondent belonged to it and that the sums received from the sale of the said bungalow should be paid to the said company. This can be seen in the civil suit No. WA-22NCC-9- 01/2022. This claim proceeded to trial and was eventually withdrawn after Tan Su Cheng was cross-examined by counsel for the Petitioner. He S/N 6gujrdYWcECMogOlFK76aw agreed that the suit would be withdrawn without liberty to file afresh and subject to costs of RM 20,000.00.

The above facts are not disputed by the Respondent. C. Applicable Law 9. The applicable in this area is trite. The phrase ‘just and equitable’ in Section 465 (1)(h) of the Companies Act 2016 confers wide jurisdiction upon the Court to wind up a company. See Ebrahimi v. Westbourne Galleries Ltd [1972] AC 36048, Re Tourmaline Ltd [2000] 4 HKC 34849, Eastool Industries Sdn Bhd v. Getfirms Electronics (M) Sdn Bhd (No.1) [2001] 2 MLRH 465 and Re Goodwealth Trading Pte Ltd [1990] 4 MLRH 130.

Whether or not the Court finds that it would be just and equitable to wind-up the company will depend on the facts of each case. Usually, this arises where it is shown that the relationship between the shareholders has fallen apart so that it would no longer be tenable to allow the company to exist. This usually arises if it can be shown that the dispute between the shareholders has been disruptive and is detrimental to company S/N 6gujrdYWcECMogOlFK76aw governance. The Court hearing the Petition should regard the full factual matrix of each case. See Re Sino Strategic International Ltd [2015] FCA 709. D. Decision of this Court 11. I find that the company in question is a quasi-partnership. It involves two shareholders who have equal control over the company and are on the board of the company. No party could override the other. The facts of this case fall squarely within the Ebrahimi v. Westbourne Galleries Ltd [1973] AC 360 type of companies.

The Respondent suggests that the company should not be wound up on the grounds that is just and equitable to do so. The Respondent argues that the relationship remains cordial with regard to the business affairs of the company and that the deadlock is due to the shareholding structure of the company. Counsel for the Respondent also submits that the deadlock as to the approving accounts is overstated and that his client is willing and able to discuss this further and that the business should be continued as it is a viable business entity. He also suggests that his client is willing and able to take over the shares of the Petitioner but without any S/N 6gujrdYWcECMogOlFK76aw consideration as he believes that nothing needs to be paid for the said shares. This position was put to this Court during the hearing of the Petition when asked as to the value of the shares that his client is willing to pay.

After considering the affidavits before me, I find that the shareholders cannot agree, in a timely manner, to the appointment of auditors and have not even agreed on the audited accounts since 2021. This has caused the company to fail to file the necessary accounts and other documents required by law. This has caused the company to be penalized by the Companies Commission of Malaysia.

I also find that despite the allegation by the Respondent that the business of the company persists, it is clear that the company no longer runs any business. Its sole asset, the bungalow held under HS(D) 21420, PT No. 34894, Mukim of Kuala Lumpur has since been disposed to a third party. I find that the relationship between the Petitioner and the other shareholder of this company has soured beyond repair. They no longer see eye to eye and this can be seen in the civil suit bearing number WA- 22NCC-9-01/2022. S/N 6gujrdYWcECMogOlFK76aw

The facts disclosed in the affidavits filed show that there no longer exists any trust or confidence between the shareholders. The company was established based on the personal relationship between the shareholders, clearly founded on the mutual trust each party had in the other. They were long-term business partners who had used profits from a previous business venture as capital for the investments undertaken through the company. Therefore, with the breakdown of trust and confidence as evidenced in the affidavits, I find that the company should no longer continue and ought to be wound up. Even the accounts have not been approved since 2021, which further demonstrates that the relationship is beyond redemption.

The fact that the shareholders no longer see eye to eye on every aspect as to the management of the company and are squabbling internally with no end in sight is on its own a ground to justify the winding-up of the company. I refer to Wong Chee Lin J’s decision in Tai Hean Leong & Tek Hean Leng v. New Future Capital Sdn Bhd [2018] CLJU 1647: - “[83] That will not happen in this case, as the only 2 directors and shareholders cannot see eye to eye on anything so there is no hope of the adverse effects on the affairs of the company being remedied in the S/N 6gujrdYWcECMogOlFK76aw future. I agree with the Petitioner that the only option in this case of irretrievable breakdown and deadlock is to order the winding up of the company. Accordingly, I grant order in terms of the winding up petition with costs…”

I agree that the winding-up of a company should be the last remedy invoked by Court. See Sime Darby Energy Solution Sdn Bhd v. RZH Setia Jaya Sdn Bhd [2021] MLJU 1494.

However, I cannot agree with the Respondent’s argument that the relationship between the two shareholders has remained professional and cordial. The existence of the civil suit and continuous bickering as to the affairs of the company show that the relationship is no longer viable. The shareholders no longer trust each other. It is best that the relationship be severed and the company be wound-up. The continuation of this internal strife serves no purpose and it is best that each go their own way. See Dato Ting Check Sii v. Marine Utama Sdn Bhd & Anor [2013] MLRHU 946 and Re Goodwealth Trading Pte Ltd [1990] 4 MLRH 130. S/N 6gujrdYWcECMogOlFK76aw

This internal deadlock and ongoing internal strife show that the relationship should be severed with an order to wind up on just and equitable ground. I refer to Perak Intergrated Network Services Sdn Bhd v. Urban Domain Sdn Bhd [2018] 4 MLJ 1: “[58] Where the board of a company is equally split between directors with opposing views, the management of the company is said to be in a deadlock. Where the shareholding of a company is equally split between shareholders taking opposing stances, the body of members of the company is said to be in a deadlock… ……. [75] In cases where there was a deadlock in the board of directors and body of members in a company, the courts have exercised jurisdiction under the just and equitable provision to order a company to be wound up. A prominent example is in Re Yenidje Tobacco Company, Limited [1916] 2 Ch 426. ,… [82] The authorities above indicate that a deadlock scenario is one of the circumstances where the court may exercise its jurisdiction to wind up the company on just and equitable grounds. As a matter of law, a petition to S/N 6gujrdYWcECMogOlFK76aw wind up a company under s 218(1)(i) of the Act may be brought by a shareholder where there is a deadlock in the board of directors and shareholders of the company.”

I have considered the Respondent’s submission that the company should not be wound up and instead for an order that the shares of the Petitioner should be transferred to the other shareholder in the company. However, during submissions, he refused to offer or agree to purchase the said shares for valuable consideration. Instead, he suggested that the shares be transferred without any consideration to enable the company to remain. He tried to suggests that the shares are not seen valuable to the Petitioner as he now wishes to wind up the company but it is valuable to his client. Therefore, he suggests that his client should be given those shares without any payment.

I cannot accept such contention and find that this is a wrongful attempt to deprive the Petitioner of his rights as a shareholder in the company. He has invested his fair share in the capital of the company and even if he were to transfer his shares to his former partner, he should be compensated for the fair value of the shares. The said proposal shows that this Company should no longer continue as parties are no longer S/N 6gujrdYWcECMogOlFK76aw seeing eye to eye and the other shareholder does not even accept that if he wishes to have the Petitioner’s shares, he should pay for them based on the reasonable value of the company.

I have also considered the argument put forward by the Respondent, which challenges the bona fides of the Petitioner’s application. Counsel for the Respondent contends that there was undue delay on the part of the Petitioner in filing this application, and further submits that the Petition is motivated by factors unrelated to the company’s affairs, particularly the personal animosity the Petitioner held toward the other shareholder.

I do not accept the said contention. I find that the Petitioner filed this application within a reasonable time after the issues concerning the property held by the company and the financial institution were resolved. There was a overbearing financial obligation that the company and its shareholders had to settle with the bank. I also find that the Petitioner made reasonable efforts to resolve all outstanding matters, including those involving the bank and the company’s accounts. However, these efforts were not agreed to by the other shareholder, without any reasonable justification. S/N 6gujrdYWcECMogOlFK76aw

Therefore, in view of the ongoing internal strife within the company, it is best that the company be wound up. To allow such a relationship to continue is like seeing a furnace that no longer conceals the fiery materials within and has caused damage to those who continue to put fuel to it. It is the duty of this Court to shutter the fire contained in the furnace before it becomes worst.

I therefore find that the Petitioner has proven that it is just and equitable for the company to be wound up.

For the above reasons, I grant the following orders: -

the Respondent be wound up pursuant to Section 465(1)(h) of the Companies Act 2016 and an independent liquidator appointed;

(ii) Mr Lim Tian Huat (NRIC No.: 541128-04-5235) and Mr Chiang Teng Guan (NRIC No.: 851030-04-5265) of Rodgers Reidy & Co to be appointed on a joint and several basis as the Liquidators of the Respondent; S/N 6gujrdYWcECMogOlFK76aw

(iii) that the remuneration payable to the liquidators shall be based on the prescribed scale of fees in Second Schedule to the Companies (Winding-up) Rules 1972; and

(iv) that the cost of this Petition of RM 10,000.00 be paid out of the assets of the Respondent. Dated 30th April 2025 Dato’ Indera Mohd Arief Emran bin Arifin Judge High Court of Malaya at Kuala Lumpur NCC5 S/N 6gujrdYWcECMogOlFK76aw Counsel: M Y Goh & Chang Jo Ee For the Petitioner Iza Ng Yeoh & Kit Advocates & Solicitors Maurice Scully For the Respondent M Scully Advocates & Solicitors S/N 6gujrdYWcECMogOlFK76aw