Sandeep Singh Grewal v 1. ) Tan Eng Joo (WA-24NCC-155-03/2023)

TAN ENG JOO (NRIC No.: 760413-14-5809)

JIANG YIHONG (Passport No.: K07059858)

PAYSOLUTION TECHNOLOGIES SDN BHD (Company No.: 200701036925 (794954-T)) ...DEFENDANTS GROUNDS OF JUDGMENT [1] This case arises from a dispute between two equal shareholders and directors in a closely held company, with both parties alleging serious grievances against one another. At the core of the matter is the Plaintiff’s claim of oppression under Section 346 of the Companies Act 2016, stemming from the passing of several resolutions that he contends were executed unlawfully and with the intent of excluding him from the management of the company. The key issues before the court include whether the impugned resolutions amount to oppressive conduct, whether the Plaintiff’s shareholder rights have been unfairly disregarded, and what remedies, if any, are appropriate to resolve the deadlock and deteriorated relationship between the parties. Background facts [2] The case concerns the 3rd Defendant, Paysolution Technologies Sdn Bhd (“the Company”), which was incorporated on 7.11.2007. The Company’s shareholders are the Plaintiff, Sandeep Singh Grewal, and the 1st Defendant, Tan Eng Joo (“D1”), each holding 50,000 shares representing 50% shareholding. Both were also appointed as directors upon incorporation. [3] The Company’s primary business activity was property investment. Its business model involved purchasing properties, with both shareholders providing personal guarantees for bank financing, collecting rental income from the properties, using the rental proceeds to service the mortgage loans, and treating any surplus as profit. By March 2022, the Company had acquired approximately 15 properties including units in Plaza Pantai, Sentral Bazaar Nilai, and properties in Ipoh and Penang. [4] In 2017, the Plaintiff and D1 agreed to divide the management of their various business ventures between them. Under this arrangement, D1 was to handle the day-to-day management of the Company while the Plaintiff managed other companies. [5] In 2019, RHB Bank commenced legal proceedings against the Company, the Plaintiff and D1 (Kuala Lumpur High Court Suit No. WA-22NCC-328-06/2019) due to alleged loan defaults. Following this, on 16.10.2019, the parties entered into a Mutual Understanding Agreement (“MUA”) whereby D1 would make advances to the Company to repay outstanding loan sums to RHB Bank and sell the Company’s properties at rates no lower than specified reserve prices. The RHB Bank suit was subsequently withdrawn. [6] In or around 2021, the Plaintiff entered the premises of the Company, leading to legal proceedings by certain tenants against the Company, the Plaintiff and D1 in Kuala Lumpur High Court Suit No. WA-22NCvC-335-06/2022 (“Musang Valley suits”). While initially involving 25 plaintiffs, most of these claims were later withdrawn with only four plaintiffs refiling claims limited to the issue of trespass. [7] On 13.10.2022, a Members’ Written Resolution (“MR”) was circulated for the appointment of the 2nd Defendant, Jiang Yihong (“D2”), as an additional director of the Company (“MR (D2’s Appointment)”). On 17.10.2022, a Directors’ Written Resolution (“DR”) was circulated regarding change of company secretary and registered address DR (CoSec & Registered Address Change). On 4.11.2022, two further resolutions were circulated - a Members’ Written Resolution regarding approval under Section 223 of the Companies Act 2016 (“MR (Section 223 Disposal)”), and Directors’ Written Resolutions regarding the appointment of Messrs Jasbeer, Nur & Lee as the Company’s solicitors (“DR (JNL Appointment)” and the disposal of certain Company assets (“DR (Section 223 Disposal)”). These resolutions will be referred to as “the Impugned Resolutions.” [8] On 14.11.2022, the Plaintiff wrote to the Company Secretary requesting documents relating to the Company. The Company Secretary responded on 16.11.2022 providing copies of the above resolutions. These resolutions had been signed by D1 both as shareholder and as “Chairman of the Company”. [9] On 16.3.2023, the Plaintiff commenced the present proceedings under Section 346 of the Companies Act 2016. On 18.8.2023, the Company commenced derivative proceedings against the Plaintiff (Kuala Lumpur High Court Suit No. WA-22NCVC-109-02/2024), which is fixed for trial in March 2025. In this suit, the Company alleges that the Plaintiff and Cisco (M) Sdn Bhd illegally broke into three company premises on 28.5.2022, stole sensitive documents/assets, breached fiduciary duties, and conspired to harm the business, leading to tenant losses and reputational damage. The Plaintiff seeks declarations of unlawful conduct, return of stolen items, compensation, and injunctions. [10] As at the date of hearing, the Company is in the process of applying for judicial management to address its financial situation. Multiple legal proceedings remain ongoing between the parties in various courts, including suits relating to the MUA in the Shah Alam High Court and proceedings concerning another company, Freeman Education Sdn Bhd. The Originating Summons (Enclosure 1) [11] The Originating Summons in Enclosure 1 relates to a claim under Section 346 of the Companies Act 2016, where the Plaintiff alleges oppression, unfair discrimination, and unfair prejudice by D1. The Plaintiff seeks the relief of either (1) a buyout of his shares by D1 at fair market value as determined by an independent valuer, or (2) the winding-up of the Company due to an irretrievable breakdown in the business relationship. Additionally, the Plaintiff challenges five resolutions passed between October and November 2022, including the appointment of a new director, asset disposals, and other administrative changes, arguing that they were executed without proper authority and in a manner that excluded him from corporate governance, rendering his position as a 50% shareholder meaningless. [12] Section 346 of the Companies Act 2016 provides the statutory basis for the Plaintiff's claim. The relevant provisions state: “346 Remedy in cases of an oppression

Any member or debenture holder of a company may apply to the Court for an order under this section on the ground-

that the affairs of the company are being conducted or the powers of the directors are being exercised in a manner oppressive to one or more of the members or debenture holders including himself or in disregard of his or their interests as members, shareholders or debenture holders of the company; or

that some act of the company has been done or is threatened or that some resolution of the members, debenture holders or any class of them has been passed or is proposed which unfairly discriminates against or is otherwise prejudicial to one or more of the members or debenture holders, including himself.

If on such application the Court is of the opinion that either of those grounds is established, the Court may make such order as the Court thinks fit with the view to bringing to an end or remedying the matters complained of, and without prejudice to the generality of subsection (1), the order may-

direct or prohibit any act or cancel or vary any transaction or resolution;

regulate the conduct of the affairs of the company in the future;

provide for the purchase of the shares or debentures of the company by other members or debenture holders of the company or by the company itself;

in the case of a purchase of shares by the company, provide for a reduction accordingly of capital of the company; or

provide that the company be wound up.” [13] The grounds of the application include allegations that D1 improperly exercised a casting vote to pass the contested resolutions, a power purportedly unsupported by the Company’s constitution, which adopts Table A of the Companies Act 1965. The Plaintiff argues that D1’s actions represent a visible departure from standards of fair dealing and a violation of equitable principles, fundamentally altering the structure of governance and excluding him from company management. The Plaintiff also highlights the collapse of trust and cooperation between the two shareholders - former close business partners - as evidence of a deadlock, necessitating judicial intervention to protect his rights. Respective parties’ submissions [14] The Plaintiff alleges that his rights as an equal shareholder and director of the Company have been violated due to oppressive conduct by D1. The Plaintiff argues that D1 unilaterally passed five resolutions between October and November 2022, including the appointment of D2 as a director, through the wrongful use of a casting vote, which rendered the Plaintiff effectively powerless in corporate decision-making. The Plaintiff contends that the Company’s Articles of Association (adopting Table A) only allow the exercise of a casting vote during general meetings, not for written resolutions, making D1’s actions procedurally invalid. These resolutions, including those relating to the disposal of assets and appointment of solicitors, are claimed to have fundamentally altered the Company’s governance structure in a way that excluded the Plaintiff from meaningful participation, despite his 50% shareholding. The Plaintiff asserts that these actions amount to a pattern of systemic oppression, disregarding his rights and expectations as an equal partner, and seeks a buyout of shares or the winding up of the Company to resolve the deadlock. [15] The Defendants argue that the Plaintiff has failed to prove oppression under Section 346 of the Companies Act 2016 and that the disputed resolutions were routine business decisions passed in accordance with the Company’s constitution. D1 asserts that he lawfully exercised his authority as Chairman, including casting votes, to prevent a deadlock following the Plaintiff’s refusal to cooperate. The Defendants emphasise that the Plaintiff remains a 50% shareholder and director of the Company, and his rights have not been materially affected. They further submit that the oppression application is a tactical move to derail an ongoing derivative action against the Plaintiff regarding alleged misconduct, including unlawful entry into tenant premises (Musang Valley suits). The Defendants highlight that the Plaintiff was given proper notice of the resolutions, which were circulated via AR registered mail, and that the actions taken were in the best interests of the Company, particularly in defending multiple legal claims. Consequently, the Defendants believe the Plaintiff’s allegations lack merit and are motivated by collateral purposes. Analysis and findings of the court The Oppressive Nature of the Impugned Resolutions [16] The Plaintiff contends that the passing of the Impugned Resolutions between 13.10.2022 and 4.11.2022 constitutes oppressive conduct against him as a 50% shareholder of the Company. The gravamen of his complaint is that D1 unilaterally appointed D2 as a director through MR (D2’s Appointment) by purportedly exercising a casting vote as “Chairman”, thereafter using this majority on the board to pass the subsequent resolutions without his participation. The Plaintiff argues this effectively neutralised his position as an equal shareholder and director of the Company. [17] The Defendants maintain that the resolutions were validly passed in the ordinary course of business and do not amount to oppression as they have not affected the Plaintiff’s shareholding, which remains at 50%. They contend that D1’s exercise of a casting vote was proper under the Company’s constitution, and that the appointment of directors and changes to management are internal matters that do not constitute oppression. The Defendants further argue that the Plaintiff was given proper notice of all resolutions but chose not to participate. [18] Having carefully considered the evidence and submissions, I find that the Impugned Resolutions, viewed collectively and in context, constitute oppressive conduct against the Plaintiff. The evidence shows that prior to October 2022, the Company had been managed jointly by the Plaintiff and D1 as equal shareholders since its incorporation in 2007, with major decisions requiring mutual agreement. This changed dramatically when D1 purported to appoint D2 through MR (D2’s Appointment) on 13.10.2022, signing both as shareholder and as “Chairman” with an alleged casting vote. [19] D1’s claim to exercise a casting vote on written resolutions finds no basis in the Company’s constitution. As argued correctly by the Plaintiff, Article 53 of Table A (which applies to the Company) only permits a casting vote “in the case of an equality of votes, whether on a show of hands or on a poll, the chairman of the meeting at which the show of hands takes place or at which the poll is demanded shall be entitled to a second or casting vote.” This provision clearly contemplates the exercise of a casting vote only at physical meetings where there is deadlock, not for written resolutions circulated outside of meetings. [20] The improper appointment of D2 through this mechanism had far-reaching consequences, as demonstrated by the cascade of resolutions that followed. Within weeks, the newly constituted board majority passed the DR (CoSec & Registered Address Change) dated 17.10.2022 effecting the vacation of the previous company secretary Siew Ngei Lam and appointment of Heng Chiang Pooh as new company secretary while changing the registered address from Petaling Jaya to Kuala Lumpur; the MR (Section 223 Disposal) dated 4.11.2022 authorising directors to carry into effect proposals for acquisition of undertakings or property of substantial value and disposal of substantial portions of the Company’s undertaking or property where such transactions exceed 25% of total assets, net profits, or issued share capital; the DR (Section 223 Disposal) dated 4.11.2022 specifically authorising disposal of three commercial shoplots at No. 1, 3 & 5, Jalan Mustapha Al-Bakri, Ipoh, Perak to Titanium Quantum Bhd; and the DR (JNL Appointment) dated 4.11.2022 appointing Messrs Jasbeer, Nur & Lee as the Company’s solicitors, fundamentally altering the Company’s management structure and authorising major asset disposals without meaningful participation from the Plaintiff. [21] The Singapore Court of Appeal’s approach in Ho Yew Kong v Sakae Holdings Ltd [2018] SGCA 33, as cited in Dato’ Shabaruddin Ibrahim v Dato’ Ruslan Ali Omar & Ors [2021] 2 MLRH 1, is instructive in analysing whether these actions constitute oppression. In that case, the Singapore Court of Appeal established an analytical framework for distinguishing between oppression actions and derivative actions where corporate wrongs also contain features of personal wrongs against shareholders. Ong Chee Kwan JC (as he then was), in applying this framework, applied the subsequent Singapore Court of Appeal clarification in Suying Design Pte Ltd v Ng Kian Huan Edmund [2020] SGCA 46 that “the nature of the loss relied on is of vital importance since it would follow as a matter of logical argument that most corporate wrongs would have some ill-effects on the interests of the shareholders of the company and its creditors”. His Lordship further applied the principle that “it is thus not sufficient to simply claim, for example, that the misappropriation of the company’s assets has resulted in a decrease in the value of the shares held by a minority shareholder.” Here, the injury to the Plaintiff is distinct from mere corporate wrongs - it represents a systematic attempt to exclude him from meaningful participation in the Company’s affairs despite his position as an equal shareholder. [22] This conclusion is reinforced by Re Richardson & Wrench Holdings Pty Ltd [2013] NSWSC 1990, where minority directors (holding 29% shareholding) used their temporary control to amend the company’s articles to require 75% majority votes for all resolutions, thereby denying the majority shareholder (71%) the ability to carry ordinary resolutions. The court found this conduct oppressive, stating: “The concept that, to effect any business at a general meeting, the majority should require the assent of the minority when it had not acquired its shareholding on that basis at the outset and when that position was, in effect, foist on the company by the minority while temporarily in control, is plainly, in my judgment, within the test of oppression.” [23] Similarly here, D1’s actions in manufacturing a casting vote to appoint D2, followed by the passage of significant resolutions through this artificially created majority, strikes at the heart of the Plaintiff’s rights as an equal shareholder. [24] The Defendants’ argument that oppression cannot be established because the Plaintiff retains his 50% shareholding misses the mark. As demonstrated in Chiptar Holdings Sdn Bhd v THC Rice (KL) Sdn Bhd [2023] 1 LNS 585 (HC), a case involving four proposed rights issues allegedly designed to dilute the plaintiff’s 80.93% shareholding in THC Rice, the High Court found that even where the proposed rights issues were motivated “not in the interest of the company but with the objective of diluting the shareholdings of the minority shareholder(s) or for other improper purpose, the Court will intervene.” The court held that “a singular dilution of the shareholding of a shareholder in an unfair and egregious manner can suffice as oppressive conduct if it shows a strong propensity or tendency to blatantly disregard or prejudice the interest of the said shareholder.” The High Court further established that “relief must be considered in the context of the reality and practicalities of the overall situation - past, present and future” and, applying the principle from Cheyne v Alfred Cheyne Engineering Ltd [2021] CSOH 17, that “In a situation where persons expect to remain as both a shareholder and a director, but the relationship between them has broken down and one is being excluded from being a director, the court will often order a clean break whereby the majority shareholder buys out the minority.” While the Plaintiff’s shareholding percentage remains unchanged on paper, the practical effect of the Impugned Resolutions has been to render his position as an equal shareholder nugatory. [25] The orchestrated nature of these actions, beginning with the improper exercise of a casting vote and culminating in resolutions authorising substantial asset disposals without the Plaintiff’s meaningful participation, evidences a clear pattern of conduct that unfairly disregards the Plaintiff’s interests as a shareholder. This satisfies the requirement under Section 346 of the Companies Act 2016 for visible departure from standards of fair dealing, as articulated by the Privy Council in Re Kong Thai Sawmill (Miri) Sdn Bhd [1978] 1 MLRA 235, where Lord Wilberforce stated: “As was said in a decision upon the United Kingdom section there must be a visible departure from the standards of fair dealing and a violation of the conditions of fair play which a shareholder is entitled to expect before a case of oppression can be made (Elder v Elder & Watson Ltd): their Lordships would place the emphasis on ‘visible’.” [26] The Defendants’ reliance on Justice Ahmad Shahrir’s dismissal of the Plaintiff’s application to strike out the appearance and defence filed by Messrs. Jasbeer, Nur & Lee in the Musang Valley suit is misplaced. That decision was made in a different context and for different purposes. The learned judge was not asked to determine, and did not determine, whether the appointment process itself constituted oppressive conduct within the meaning of Section 346 of the Companies Act 2016. The dismissal of a striking out application, which by its nature sets a high threshold, does not preclude this court from examining the circumstances of the appointment as part of a pattern of oppressive conduct. [27] The appointment of Messrs. Jasbeer, Nur & Lee as the Company’s solicitors through DR cannot be viewed in isolation but must be seen as part of the orchestrated sequence of events following the improper appointment of D2. The evidence shows that the appointment was only possible because of the artificial majority created on the board, and that it was done without proper consultation with the Plaintiff despite his position as an equal shareholder. While the appointment of solicitors may ordinarily be a routine matter, when viewed in its proper context as one of several resolutions passed to entrench D1’s control and sideline the Plaintiff, it forms part of the pattern of conduct that unfairly disregards the Plaintiff’s interests. As noted by Gopal Sri Ram FCJ in Owen Sim Liang Khui v Piasau Jaya Sdn Bhd & Anor [1996] 4 CLJ 716, the question of whether conduct amounts to oppression or unfair prejudice “must eminently be determined according to the facts of each particular case.” The Validity of D1’s Exercise of Casting Vote as Chairman in Passing the Impugned Resolutions [28] The Plaintiff contends that D1’s purported exercise of a casting vote as “Chairman” in passing the Impugned Resolutions, particularly the MR (D2’s Appointment) and MR (Section 223 Disposal), was invalid and without basis under the Company’s Articles of Association. The Plaintiff argues that as the Company has no specially drafted articles, Table A of the Companies Act 1965 applies, and Article 53 therein only permits a casting vote in the context of general meetings where there is an equality of votes. The Plaintiff submits that none of these conditions were met, as the resolutions were passed as written resolutions without any general meeting being called. [29] The Defendants maintain that D1’s exercise of the casting vote was valid as he was properly appointed as Chairman of the Company, and this appointment was duly minuted. They argue that the Plaintiff did not specifically challenge D1’s position as Chairman in his affidavits, and that this challenge was only raised belatedly during submissions. The Defendants further contend that the casting vote mechanism was necessary to prevent deadlock given the Plaintiff’s refusal to cooperate in the management of the Company. [30] Upon careful consideration of the evidence and submissions, I find that D1’s purported exercise of a casting vote in passing the Impugned Resolutions was invalid and without legal basis. The evidence shows that D1 signed the MR (D2’s Appointment) dated 13.10.2022 twice - once as a shareholder and again as “Chairman of the Company” purportedly exercising a casting vote. This same approach was adopted for the MR (Section 223 Disposal) dated 4.11.2022. [31] The Company’s Articles of Association incorporate Table A of the Fourth Schedule to the Companies Act 1965 explicitly provides that a casting vote may only be exercised by “the chairman of the meeting at which the show of hands takes place or at which the poll is demanded.” This provision clearly contemplates three prerequisites for a valid exercise of a casting vote: first, there must be a general meeting properly called; second, there must be an equality of votes at that meeting; and third, only then may the chairman exercise a casting vote to break the deadlock. [32] In the present case, these prerequisites were manifestly not satisfied. The Impugned Resolutions were passed as written resolutions pursuant to section 290 of the Companies Act 2016, specifically under section 290(1)(a) which provides that “a resolution of the members or of a class of members of a private company shall be passed either- (a) by a written resolution”. No general meetings were called or held. There was consequently no opportunity for an equality of votes to arise at any meeting, which would have triggered the chairman’s right to exercise a casting vote under Article 53. [33] The Defendants’ argument that the Plaintiff failed to specifically challenge D1’s position as Chairman in his affidavits is wholly unsustainable and appears to be an attempt to divert attention from the substantive issue. A careful examination of the Plaintiff’s Affidavit in Support at Enclosure 2, page 53, paragraphs 69 and 70, reveals that the Plaintiff unequivocally challenged both D1’s assumption of the chairman’s role and his purported exercise of a casting vote. Paragraph 69 expressly states that D1 was “wrongfully assuming the role of / appointing himself as the chairman of the Company,” while paragraph 70 specifically addresses the “unlawful and wrongful exercise of his alleged ‘casting vote’.” These statements directly contest both D1’s purported status as chairman and his consequential right to exercise any casting vote. [34] The Defendants’ contention that this challenge was not sufficiently specific is without merit. The language employed by the Plaintiff is clear, unambiguous, and directly addresses the very issue at hand. It would be artificial and overly technical to require the Plaintiff to employ any particular form of words beyond those actually used, which plainly communicate the substance of his challenge. Moreover, even if there had been any ambiguity in the Plaintiff’s affidavit (which I do not accept), the averments must be read as a whole, and the entirety of the Plaintiff’s case, as set out in his affidavit and submissions, consistently challenges the validity of D1’s actions in purporting to exercise a casting vote. The law looks to substance rather than form, and the substance of the Plaintiff’s challenge to D1’s purported exercise of a casting vote is abundantly clear. [35] This case bears similarity to Re Richardson & Wrench Holdings, where the New South Wales Supreme Court (per Brereton J) found oppression where structural changes to the company’s constitution, orchestrated by a minority interest, deprived the majority shareholder of the ability to carry ordinary resolutions in general meetings. As the court held: “an act by directors representing a minority beneficial interest to effect a change in the articles of association such as to deny the majority the ability to carry an ordinary resolution in a general meeting is an act that is, within the language of the statute, oppressive to, unfairly prejudicial to or unfairly discriminatory against the majority.” [36] The court further stated that: “The concept that, to effect any business at a general meeting, the majority should require the assent of the minority when it had not acquired its shareholding on that basis at the outset and when that position was, in effect, foist on the company by the minority while temporarily in control, is plainly, in my judgment, within the test of oppression.” [37] Similarly here, D1’s purported exercise of a casting vote in written resolutions, without any basis in the Company’s Articles of Association, effectively nullified the Plaintiff’s voting rights as a 50% shareholder. [38] The Defendants’ contention that the casting vote mechanism was necessary to prevent deadlock cannot override the clear requirements of the Company’s Articles of Association. If D1 wished to break a deadlock, the proper course would have been to call a general meeting in accordance with the Articles, not to unilaterally assume a power to exercise a casting vote in written resolutions where no such power exists. [39] For these reasons, I find that D1’s purported exercise of a casting vote in passing the Impugned Resolutions was invalid and constituted an act of oppression against the Plaintiff’s interests as a shareholder. Corporate Wrongs vs Oppression [40] The Plaintiff contends that D1’s actions in passing the Impugned Resolutions, particularly the Members’ Resolution appointing D2 as director and the subsequent resolutions for disposal of company assets, constitute oppressive conduct against him as a shareholder rather than corporate wrongs. The Plaintiff argues that these actions effectively neutralised his voting power and rights as a 50% shareholder, rendering his position in the Company meaningless. He emphasises that D1 improperly exercised a purported casting vote without any constitutional basis, as the Company’s Articles of Association only permit such votes in general meetings where there is an equality of votes. [41] The Defendants maintain that the Plaintiff’s complaints, if proven true, amount to corporate wrongs against the Company rather than oppression against the Plaintiff as a shareholder. They argue that the Plaintiff has failed to demonstrate how the Impugned Resolutions have prejudicially affected his shareholding rights, noting that he remains a 50% shareholder. The Defendants contend that the appointment of directors, change of company secretary, and disposal of assets are ordinary business decisions that do not constitute oppression. [42] After careful consideration of the submissions and evidence, I find that the Plaintiff’s complaints constitute oppression rather than mere corporate wrongs. The distinction between corporate wrongs and oppression was clearly articulated by Millett J in the English High Court case of Re Charnley Davies Ltd (No 2) [1990] BCLC 760, which was cited with approval by the High Court in The Bank of Nova Scotia Bhd & Anor v Lion DRI Sdn Bhd & Ors [2021] 2 CLJ 400. In that case, the plaintiffs were banks seeking relief under section 346 of the Companies Act 2016 against directors who had allegedly allowed their company to continue trading with an insolvent customer, resulting in substantial losses. The court held that the plaintiffs’ complaints constituted misconduct rather than mismanagement, noting from Re Charnley Davies Ltd: “The very same facts may well found either a derivative action or a s. 459 petition. But that should not disguise the fact that the nature of the complaint and the appropriate relief is different in the two cases. Had the petitioners’ true complaint been of the unlawfulness of the respondent’s conduct, so that it would be met by an order for restitution, then a derivative action would have been appropriate and a s. 459 petition would not.” [43] The key consideration is not the particular acts complained of, but rather the nature of the complaint and the remedy necessary to address it. Where the complaint centres on the unlawfulness of conduct requiring restitution to the company, it is properly pursued as a derivative action. However, where the complaint, as here, concerns the manner in which company affairs are conducted in disregard of a member’s interests, with the aggrieved party seeking to exit the company, it is properly characterised as oppression. [44] The evidence reveals that on 13.10.2022, D1 purported to pass MR (D2’s Appointment) by exercising both his vote as shareholder and a purported casting vote as chairman. This was followed by MR (Section 223 Disposal) on 4.11.2022, passed in the same manner. These resolutions fundamentally altered the power dynamics within the Company, which had historically operated with both the Plaintiff and D1 as equal shareholders and directors since

The effect was to dilute the Plaintiff’s voting power and decision-making authority despite his 50% shareholding. [45] The New South Wales Supreme Court decision in Re Richardson & Wrench Holdings is particularly instructive. There, the court found oppression where directors representing a minority interest effected changes to deny the majority the ability to carry ordinary resolutions, holding that such conduct was “plainly within the test of oppression.” Similarly here, D1’s actions in unilaterally appointing D2 and claiming an unauthorised casting vote effectively denied the Plaintiff his rights as an equal shareholder. [46] Significantly, Article 53 of the Company’s Articles of Association (adopting Table A) only permits a casting vote “in the case of an equality of votes, whether on a show of hands or on a poll, the chairman of the meeting at which the show of hands takes place or at which the poll is demanded.” D1’s exercise of a purported casting vote in written resolutions, without any general meeting or actual equality of votes, represents a clear departure from proper corporate procedure that specifically prejudices the Plaintiff’s position as a shareholder. [47] The High Court in Chiptar Holdings recognised that even a single instance of unfair dilution of shareholding rights can constitute oppression where it demonstrates “a strong propensity or tendency to blatantly disregard or prejudice the interest of the said shareholder.” The present case demonstrates precisely such conduct through the systematic passing of resolutions that override the Plaintiff’s rights as an equal shareholder. [48] The Defendants’ reliance on Ng Ka Giap v Lim Poh Chai & Ors [2023] MLRHU 606 (HC) regarding appointment of directors is materially distinguishable from the present case. While Ng Ka Giap confirms that “appointment and removal of directors is solely an internal matter of the company,” the court emphasised that oppression requires “a visible departure from the standards of fair dealing and a violation of conditions of fair play”, citing Re Kong Thai. [49] Unlike in Ng Ka Giap, where the plaintiff failed to demonstrate how the appointment was “unfair, discriminatory, prejudicial, or oppressive”, the present case involves D1 unilaterally appointing D2 as director by improperly exercising a purported ‘casting vote’ to break a non-existent deadlock in written resolutions, for which no casting vote mechanism exists under the Companies Act 2016 or the Company’s constitution with respect to written resolutions. This represents precisely the type of ‘disregard’ that the court described as requiring “awareness of that interest and an evident decision to override it or brush it aside or to set at naught the proper company procedure”, citing Re Kong Thai. [50] Furthermore, Ng Ka Giap concerned isolated disagreements about business decisions, whereas the present case demonstrates a systematic pattern of conduct designed to neutralise the Plaintiff’s voting rights, effectively converting his 50% shareholding into a meaningless stake. This pattern culminated in the passing of substantive resolutions regarding asset disposal without proper adherence to procedural requirements. The court in Ng Ka Giap specifically noted, citing Re Kong Thai, that oppression may be “demonstrated by a course of conduct which in some identifiable respect, or at an identifiable point in time, can be held to have crossed the line.” [51] The present case is not merely about disagreement with majority decisions, but rather involves fundamental breaches of shareholder rights and circumvention of proper corporate governance that strike at the very core of the Plaintiff’s rights qua shareholder, which is the essential foundation for oppression remedies as recognised in paragraph of Ng Ka Giap. [52] I therefore find that the Plaintiff’s complaints properly constitute oppression rather than corporate wrongs. The remedy sought - either a buyout or winding up - is characteristic of oppression actions where the underlying commercial relationship has broken down irretrievably, rather than the restitutionary remedies typical of derivative actions for corporate wrongs. The Deterioration of the Relationship Between the Parties and the Just and Equitable Basis for Granting Relief [53] The Plaintiff contends that the relationship between himself and D1 has irretrievably broken down to the point where it would be unjust and inequitable to force them to continue their business relationship. He submits that from being close friends and business partners who operated multiple companies together since the early 2000s, their relationship has deteriorated significantly since 2017, leading to multiple lawsuits between them across different courts. The Plaintiff argues that the oppressive conduct of D1 in passing the Impugned Resolutions without his knowledge or participation has made their continued association untenable. [54] The Defendants argue that the breakdown in relationship alone does not justify the granting of relief under section 346 of the Companies Act 2016. They contend that the Plaintiff is responsible for the Company’s difficulties through his own conduct, particularly the break-in incident that led to the Musang Valley litigation and the derivative action. The Defendants submit that the Plaintiff’s application is an attempt to defeat the derivative action and that the appropriate course would be to allow the judicial management application to proceed. [55] Having carefully considered the submissions and evidence before me, I find that there has been a complete breakdown in the relationship between the Plaintiff and D1 that justifies the granting of relief. The evidence shows that these two individuals built their business empire together over many years, always maintaining equal shareholding and directorship in their companies, including the Company. Their modus operandi, as demonstrated by the evidence, was one of mutual trust and cooperation. This changed dramatically after 2017, when despite agreeing to split the management of their various companies between them, the relationship began to deteriorate following issues with RHB Bank’s litigation against the Company in 2019. [56] The subsequent events, including the multiple lawsuits between the parties, demonstrate an irretrievable breakdown in their relationship. While the Defendants argue that the Plaintiff’s conduct led to these disputes, I find that the very existence of these numerous legal proceedings - including the MUA Suit, the Musang Valley litigation, and the derivative action - evidences the complete collapse of trust and cooperation between these former friends and business partners. [57] The High Court in Chiptar Holdings has provided clear guidance on assessing the appropriate relief in oppression cases. The court held that any relief must be considered in the context of the reality and practicalities of the overall situation - past, present and future. Particularly relevant to the present case is the court’s observation that where persons expect to remain as both shareholder and director, but their relationship has broken down and one is being excluded, the court will often order a clean break whereby one party buys out the other. [58] The sequence of events surrounding the Impugned Resolutions further demonstrates the impossibility of these parties continuing their business relationship. The manner in which D1 purported to exercise a casting vote to pass these resolutions, particularly the appointment of D2 (who resides in Hong Kong) and the authorisation for disposal of the Company’s assets, shows a complete disregard for the partnership principle that had previously governed their relationship. [59] The Federal Court in Auspicious Journey Sdn Bhd v Ebony Ritz Sdn Bhd & Ors [2021] 3 MLJ 549 addressed a case involving a joint venture company formed by Auspicious Journey (minority shareholder holding 20%) and Hoe Leong (majority shareholder holding 80%) for acquiring shares in an oil-tanker chartering business. The relationship between the shareholders had completely broken down, with the minority shareholder alleging oppressive conduct by the majority. In considering the appropriate remedy, the Federal Court held: “The courts have ordered a winding up where there is a deadlock between the parties such that the business cannot effectively continue. This signifies a breakdown in the relationship between the parties which is the case here. Coupled with the potential statutory contravention and Ebony Ritz’s insolvent state, winding up is justified.” [60] While the Defendants argue that the Company’s judicial management application should be allowed to proceed, I find that this would not address the fundamental issue of the broken relationship between these former partners. [61] The suggestion that this application was filed to defeat the derivative action is not supported by the chronology - the OS was filed on 15.3.2023, several months before the derivative action was commenced on 22.8.2023. Moreover, even if the relief sought were granted, this would not necessarily defeat the derivative action, which could continue with a liquidator in place of the Company. [62] In these circumstances, I find that it would be unjust and inequitable to force these parties to maintain their business relationship. The evidence demonstrates not merely a commercial disagreement but a fundamental breakdown in the relationship between former friends and business partners who can no longer work together effectively. The appropriate course is to allow them to separate their business interests through either a buyout or winding up of the Company. The Appropriate Remedy Where Oppression Is Established [63] The Plaintiff contends that given the complete breakdown in the relationship between himself and D1, the appropriate remedy would be either a buyout of his shares at a fair value to be determined by an independent valuator, or alternatively, the winding up of the Company. The Plaintiff argues that it would be inequitable to force the parties to maintain their “marriage of inconvenience” given the extent of oppression and the multiple disputes between them. He emphasises that his primary prayer is for a buyout rather than winding up, which demonstrates that this action was not filed with any collateral purpose of defeating the pending derivative action. [64] The Defendants oppose both proposed remedies, arguing that the Company is currently in the process of applying for judicial management to address its financial difficulties. They contend that granting either remedy would stall these proceedings to the detriment of all stakeholders, including creditors. The Defendants further argue that the oppression action was filed with the collateral purpose of defeating the derivative action sanctioned by the court and fixed for trial in March 2024. [65] Having found that oppression is established, I must now determine the appropriate remedy. In Auspicious Journey, the Federal Court held: “Section 181(2) of the CA 1965 (now s 346(2) of the CA 2016 stipulates that the court ‘may make such order as the Court thinks fit with the view to bringing an end or remedying the matters complained of’. The court is not restricted to the reliefs mentioned in s 181(2) (now s 346(2)) but is empowered to grant an open-ended range of remedies.” [66] The Federal Court further 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.” [67] The High Court in Chiptar Holdings provided helpful guidance on assessing the appropriate relief upon finding oppression. The court held that relief must be considered in the context of the reality and practicalities of the overall situation - past, present and future. Importantly, where persons expect to remain as both shareholder and director but their relationship has broken down and one is being excluded, the court will often order a clean break whereby one party buys out the other. [68] In the present case, the evidence reveals an irretrievable breakdown in the relationship between the Plaintiff and D1. From being close business partners who built multiple companies together since the early 2000s, their relationship has deteriorated to the point where they are embroiled in multiple lawsuits across different courts. The litigation includes the MUA Suit in Shah Alam High Court, another matter concerning Freeman Education Sdn Bhd, and the Musang Valley suits in the Kuala Lumpur High Court. This extensive litigation itself demonstrates the complete collapse of trust and cooperation between the parties. [69] While the Defendants raise concerns about the pending judicial management application, this does not preclude the granting of appropriate relief under section 346 of the Companies Act 2016. Indeed, the fact that judicial management is being contemplated reinforces the pressing need to resolve the deadlock between these two 50% shareholders. The judicial management process itself may be complicated by their continued antagonistic relationship. [70] As between the two remedies sought, I find that a buyout order would be more appropriate than winding up in the circumstances. This aligns with the approach in Chiptar Holdings where buyout was preferred as providing a “clean break”. A buyout would allow the business to continue under unified control while giving the Plaintiff fair value for his shares. This is particularly important given that the Company holds substantial assets in the form of numerous properties. [71] The Defendants’ argument that this action was filed to defeat the derivative action is without merit. First, this oppression action was filed on 15.3.2023, several months before the derivative action which was filed on 22.8.2023. Second, the Plaintiff’s primary prayer is for buyout rather than winding up, which would allow the derivative action to proceed. Even if winding up were ordered, the derivative action could continue with the liquidator taking over conduct of the proceedings. [72] In exercising my discretion under section 346(2) of the Companies Act 2016, I therefore find that the appropriate remedy is to order the buyout of the Plaintiff’s shares at a fair value to be determined by an independent valuator. This will provide a clean break between the parties while preserving the Company as a going concern. The valuation should take into account the oppressive conduct that has occurred and ensure the Plaintiff receives fair value for his 50% stake in this substantial property-holding company. [73] The court declines to grant the relief sought by the Plaintiff that the Defendants “take all necessary and relevant steps to remove and/or substitute the Plaintiff as a guarantor of all banking facilities obtained by the 3rd Defendant in favour of the 3rd Defendant.” While this prayer was included in the Originating Summons and briefly mentioned in paragraph 79 of the Plaintiff’s Affidavit in Support, no substantive submissions or evidence was offered by the Plaintiff to support the granting of this particular relief. Without legal arguments addressing the court’s jurisdiction to interfere with contractual relationships involving third-party financial institutions who are not before the court, and in the absence of any precedent supporting such an order in the context of section 346 of the Companies Act 2016, this relief cannot be granted. The Plaintiff would need to address his position as guarantor through direct negotiations with the relevant financial institutions or through appropriate indemnity provisions in the share purchase agreement implementing the buyout order. Conclusion [74] Having examined the totality of the evidence and submissions before me, I am satisfied that the Plaintiff has successfully established his claim of oppression under Section 346 of the Companies Act 2016. D1’s purported exercise of a casting vote to pass the impugned resolutions, particularly for the appointment of D2 as director and subsequent changes to governance, demonstrates a systematic pattern of conduct aimed at sidelining the Plaintiff from the management and decision-making processes of the Company. This exercise of power, in the absence of a properly convened general meeting and contrary to the Company’s Articles of Association (which adopt Table A, limiting casting votes to general meetings), constitutes a visible departure from fair dealing and equitable conduct that the Plaintiff, as an equal shareholder, was entitled to expect. The cascaded effect of these resolutions has effectively neutralised the Plaintiff’s voting and management rights, rendering his position as a 50% shareholder nugatory in practice. [75] Given the irretrievable breakdown in trust and cooperation between the two equal shareholders, which is evidenced by numerous lawsuits, including the derivative action and the Musang Valley suits, it is both just and equitable to grant relief that allows the parties to separate their business interests. A buyout of the Plaintiff’s shares by D1, as prayed, is the most appropriate remedy in this case. It provides a “clean break” between the parties, preserving the Company as a going concern while compensating the Plaintiff for the dilution of his shareholder rights. [76] Accordingly, I order that an independent accountancy firm be appointed by the Court to determine the fair and just value of the Plaintiff’s shares in D3 prior to the oppressive actions, taking into account the oppressive conduct and all value of assets and/or monies that have been disposed, dissipated and/or removed from D3. Within fourteen days of such determination, D1 shall purchase the Plaintiff’s shares at the determined value, make full payment to the Plaintiff, and effect the necessary share transfers. Additionally, D1 shall take all necessary steps to remove the Plaintiff as a director of D3 within fourteen days of this Order. I further order that costs in the sum of RM15,000.00 subject to allocatur be paid by D1 to the Plaintiff. [77] This remedy not only ensures fairness but also resolves the deadlock that has paralysed the Company’s governance. 7 July 2025 ATAN MUSTAFFA YUSSOF AHMAD Judge Kuala Lumpur High Court (Commercial Division) Counsel: For the Plaintiff: Kevin Prakash with Max Kong (Messrs Kevin Prakash) For the Defendants: Dato’ Jasbeer Singh with Jeyshini Naidu (Messrs Jasbeer Nur & Lee)