Seah Kok Wah v Hee Chee Keong & 2 Lg (WA-22NCC-185-05/2018)

HEE CHEE KEONG (NRIC No.: 711205-01-5371)

LOW KOK THAI (NRIC No.: 690625-06-5199)

CHUAH TEONG MING (NRIC No.: 781009-14-5017) … DEFENDANTS

This is an application for an interim injunction and an ancillary order for accounts by the Plaintiff against the Defendants. I have dismissed the application. These are the full reasons for my decision.

The Plaintiff (Seah Kok Wah or “SKW”) and the 3 Defendants (namely Hee Chee Keong or “HCK”, Low Kok Tai or “LKT” and Chuah 2 Teong Ming or “CTM”) are the directors of Well Oriental Investments Limited (“WOI”), a company incorporated and registered in the British Virgin Islands. The Plaintiff, the 1st Defendant and the 3rd Defendant are the current shareholders of WOI.

Up to 22.8.2017, WOI was a substantial shareholder of Galasys PLC (“Galasys”), a company established under the law of Jersey and whose securities were listed on the AIM market that is operated by the London Stock Exchange. The other significant shareholder of Galasys relevant to the proceedings is Shiji (Hong Kong) Limited (“Shiji”).

Through WOI, the parties were the indirect shareholders of Galasys with the Plaintiff being the WOI nominated director of Galasys.

As a result of litigation, WOI became indebted to various creditors (“the Creditors”) and this apparently became another point of dispute amongst the parties. With a view to warding off further controversy, the Plaintiff contended that Shiji offered to buy out the shareholding of WOI in Galasys.

The Plaintiff contends that he and the 1st Defendant had guaranteed the indebtedness of WOI to the Creditors under a settlement 3 instrument, whereby they will have to incur late interests at the rate of 8% per annum.

The Plaintiff contends that the directors of WOI passed a Directors’ Circular Resolution in writing dated 26.7.2017 (“the WOI Resolution”)

3,019,603 GLS Shares to LKT; and

1,478,707 GLS Shares to CTM. ... SETTLEMENT TO CREDITORS ...

THAT authority be and is hereby given to the Company to pay or cause to be paid at the aggregate sum of GBP 1,615,408 (“Settlement Sum”) out of the Aggregate Price to Messrs Arthur Wang, Lian & Associates, Advocates and Solicitors of 568-9-10 & 9-11, 9th Floor, Kompleks Mutiara, 3 ½ Miles Jalan Ipoh, 51200 Kuala Lumpur, Malaysia (“Solicitors”) as stakeholder for 4 disbursement thereof to the Creditors in such amounts and in the manner as stated in Clauses 5.1, 5.2 and 5.3 of the Settlement Agreement”.

A Settlement Agreement dated 26.7.2017 were entered into between the parties, Soo Choong Meng, Wang Guan, WGLS Foundation and WOI (“the Settlement Agreement”).

A Sale and Purchase Agreement dated 22.8.2017 was entered into between Shiji, WOI and Soo Choong Meng (“the SPA”).

10.

Payment of GBP4,745,265.26 i.e. the initial of 50% of the Consideration was to be paid by Shiji on or before 5.8.2017 (hereinafter referred to as “The 3rd Tranche”) as follows: Parties Payment Amount (GBP) SKW (the Plaintiff) 1,045,687 LKT(the 2nd Defendant) 502,639 HCK (the 1st Defendant) 172,319 CTM (the 3rd Defendant) 44,198 5 Messrs Shui Tai (Advocates & Solicitors) – Client’s Account 762,241 Messrs Arthur Wang, Lian & Associates (Advocates & Solicitors) – Escrow Account 2,218,182 Total: 4,745,264

(ii) Payment of GBP4,745,264.26, the remaining 50% of the Consideration, was to be paid by Shiji on or before 30.8.2017 (hereinafter referred to as “The 4th Tranche”) as follows: Parties Payment Amount (GBP) SKW (the Plaintiff) 1,694,617 LKT (the 2nd Defendant) 1,109,704 HCK (the 1st Defendant) 279,256 CTM (the 3rd Defendant) 243,226 Wang Guan 183,190 Messrs Shui Tai (Advocates & Solicitors) – Client’s Account 1,235,271 Total: 4,745,264

The Plaintiff contended that he signed the SPA on 3.8.2017 and then left it to the 1st Defendant to get the other signatures of the other directors of WOI and the other parties to the SPA.

Due to some discrepancy in the payments received by him in respect of the 3rd Tranche, the Plaintiff contends that he found out that Shiji had entered into an alternative agreement for the purchase of the Galasys shares, a copy of which Shiji had forwarded to him. This 6 agreement contained materially different clauses from the SPA and in particular, there are differences in the payments to be made to the Plaintiff and to the stakeholder for the Creditors Messrs Arthur Wang Lian & Associates. I will refer to this alternative agreement as the Defendants’ version of the SPA.

The Plaintiff contends that the correct SPA was the SPA which he signed and he contends that he had never signed the Defendants’ version of the SPA. He alleged that his signature to that SPA was obtained by forgery or some mechanical process and he had obtained a handwriting expert’s report which confirmed that the signature on the Defendants’ version of the SPA was not really his signature.

The Plaintiff alleged inter alia fraud, unjust enrichment and conspiracy to defraud against the Defendants and prayed for the following orders in his Statement of Claim:

a declaration that the WOI Resolution and the Settlement Agreement is valid, effective and binding upon the parties;

a declaration that the SPA was intended to be the valid, effective and enforceable agreement entered into with Shiji (Hong Kong) Ltd and further that all monies received from 7 Shiji (Hong Kong) Ltd in respect of Shiji’s purchase of the Galasys Shares was to be allocated and paid out as required under the SPA;

an order that the Defendants each account to SKW for the monies received by them pursuant to the Defendant’s SPA and for all profit derived therefrom;

an order that the Defendants disgorge all monies received by them in excess of the monies due to them under the SPA within 7 days of an order hereof;

a declaration that LKT holds the ex-gratia payment in the sum of GBP1,829,639.00 or any part thereof that has been received as trustee for SKW and is to pay the said sum to SKW within 7 days of an order hereof;

an order that the Defendants are jointly and/or severally liable for payment of the stakeholding sum due under the 3rd Tranche of the SPA in the sum of RM8,200,000.00 into the escrow account of Messrs Arthur Wang, Lian & Associates;

an order that LKT pay SKW monies that were received from Shiji under the 3rd Tranche purportedly in furtherance of the Defendants’ SPA in the sum of GBP545,539.00 (or RM3,000,464.25, exchange rate: 5.5) within 7 days of an order hereof; 8

an order that the Defendants are jointly and/or severally liable for payment of the sum of RM316,666.70 being the interest due under the settlement instrument with the Creditors at the rate of 8% per annum calculated from 11.9.2017 to 20.5.2018 within 7 days of an order hereof;

a declaration that SKW is allowed to purchase HCK’s and CTM’s shares in WOI being the sole ‘non-defaulting Company Member’ of WOI, at a nominal value of RM1.00 (Ringgit One), pursuant to Clause 7.6 of the Shareholders

general and aggravated damages to be assessed by the

an order that the Defendants are jointly and/or severally liable for payment of the said sum of damages assessed by the Senior Assistant Registrar pursuant to paragraph 57 (j) above to SKW within 7 days from the date the assessment order was pronounced;

interest at the rate of 5% per annum on all sums due and payable by the Defendants, or any of them, save where otherwise provided for above, from 21.5.2018 to the date of full and final payment of said sums; 9

costs on indemnity basis; and/or

further or other relief that this Honourable Court deems just and fit.

The 1st Defendant did not file any affidavit in reply to the Plaintiff’s application. Learned Counsel for the 1st Defendant informed the Court that his instructions were to settle the matter and there were various adjournments granted by the Court pending settlement but the matter was never settled in the end. The Plaintiff’s application was strenuously contested by the 2nd and 3rd Defendants. They contend that there was no WOI Resolution or Settlement Agreement but that the sale of the Galasys shares to Shiji was agreed upon by the parties pursuant to a term sheet in January 2017. The 2nd and 3rd Defendants deny that WOI had any Creditors and demanded that the Plaintiff show proof of the Creditors and the settlement instrument with the Creditors which demand the Plaintiff did not comply with. The 2nd and 3rd Defendants contend that at all material times, the Defendants’ version of the SPA was the correct SPA and that the SPA alleged by the Plaintiff was false and that the Plaintiff had conspired with the 1st Defendant and the Creditors to bring this action which is an abuse of the process of the Court. The 2nd and 3rd Defendants also alleged that the 1st Defendant 10 has conspired with the Plaintiff as he (the 1st Defendant) had lodged a police report siding the Plaintiff and has admitted his liability to pay the Plaintiff.

Initially the Plaintiff sought numerous interim orders in his application but at the conclusion of submission at the hearing, the Plaintiff seeks only the following orders:

upon the Defendants’ solicitors confirmation that no monies were paid since 1st June 2018, an order against the Defendants, and each of them, that they be restrained from further giving effect to any share sale agreement for the shares in Galasys PLC owned by Well Oriental Investments Limited (“WOI”), including but not limited to, the Sale and Purchase Agreement dated 22.8.2017 exhibited to the Notice of Application (Enclosure 11) as Annexure A (“the said Agreement”) whether by themselves or through their agents and/or servants and/or such other parties acting under their control or instructions including, but not limited to:

not receiving any further sums from Shiji (Hong Kong) Co Ltd (“Shiji”) in connection with any share sale 11 agreement for the shares in Galasys PLC owned by WOI, including but not limited to, the said Agreement.

an order that each of the Defendants account for the use of any monies paid out by Shiji under any share sale agreement for the shares in Galasys PLC owned by WOI, including but not limited to, the said Agreement in connection with the 3rd Tranche by an affidavit to be affirmed by each of the Defendants and served on the Plaintiff’s solicitors within the period of seven (7) days of an order hereof.

The law and guiding principles on interim injunctions have been well enunciated in American Cynamid Co v Ethicon Ltd [1975] 1 All ER 504 which have been adopted and constantly applied in our courts as follows:

whether the Plaintiff’s claim against the Defendants on the facts discloses a bona fide serious issue to be tried. The court at this interlocutory stage is not required to determine the merits of the claim or the rights of the parties; 12

the court must then proceed to consider where the justice of the case lies, whether the harm would be greater in granting the injunction or by its refusal and arrive at a finding which party would suffer greater injustice. In this respect, if the court finds that damages would be an adequate remedy, an injunction should not be granted; and

the court must consider where the balance of convenience or the balance of justice of the case lies by weighing one need against another. If all relevant factors are evenly balanced, the status quo should be maintained.

The 2nd and 3rd Defendants relied on the decision of the Court of Appeal in Woolley Development Sdn Bhd v Stadco Sdn Bhd (No. 2) [2011] 6 MLJ 121 which held that: “[3] There were two main grounds for us deciding to allow the appellant’s appeal. First, we were of the view that the respondent had a reasonable cause of action only against the first defendant and have failed to show any bona fide serious issue for trial vis-a’-vis the second defendant. It is trite law that no interlocutory injunction ought to be granted if the applicant for an injunction fails to show any bona fide serious issue for trial. Secondly, the respondent’s alleged cause of action against the second defendant was 13 based on an allegation of ‘conspiracy to defraud’. Since damages are obviously adequate remedy in a claim based on the tort of ‘conspiracy to defraud’, no interlocutory injunction ought to be have been granted by the High Court against the second defendant. See Keet Gerald Francis Noel John v Mohd Noor bin Abdullah & Ors [1995] 1 MLJ 193. [11] Further, damages are obviously adequate remedy because the respondent’s cause of action against the second defendant is based solely on an allegation of ‘conspiracy to defraud’. It is trite law that no interlocutory injunction ought to be issued in this kind of situation. In Saw Seng Kee v Director of Lands & Mines, Penang & Ors; Teoh Han Che v Director of Lands & Mines, Penang & Ors [1987] 1 MLJ 80, Edgar Joseph Jr J held that if damages would be adequate remedy, there is no need to consider the further question of balance of convenience. His Lordship held at pp 81-82 of the report: In the Cyanamid case, Lord Diplock made the same point at pp 408B & C in the following terms: The court should first consider whether, if the plaintiff were to succeed at the trial in establishing its right to a permanent injunction, he would be adequately compensated by an award of damages for the loss he would save sustained as a result of the defendants continuing to do what was sought to be enjoined between the time of the application and the time of the trial. If 14 damages ... would be adequate remedy and the defendant would be in a financial position to pay them, no interlocutory injunction should normally be granted, however strong the plaintiff’s claim appeared to at that stage. In these circumstances, as I had no doubt as to adequacy of the plaintiffs’ remedy lying in damages should they succeed in their claims at the final hearing, there was no need for me to consider the further question of the balance of convenience (see the Cyanamid case at p 408)”

Learned Counsel for the 2nd and 3rd Defendants argued passionately that the Plaintiff has not shown a bona fide serious issue to be tried. He referred to various matters where the Plaintiff has demanded proof (such as of the Creditors and the settlement instrument with the Creditors pursuant to which the Plaintiff and the 1st Defendant purportedly had to pay interest of 8% per annum) which the Plaintiff did not exhibit and certain inconsistencies in the Plaintiff’s case. For instance, Learned Counsel for the 2nd and 3rd Defendants pointed out that it is simply illogical for the SPA which is dated 22.8.2017 to have as the date for the 3rd tranche payment 5.8.2017 whereas it is more logical that the Defendants’ version of the SPA has that date as 5.9.2017. The Plaintiff had explained that he had signed the SPA in early August before 5.8.2017 when the 5.8.2017 date for payment was still viable but 15 it was only subsequently that the SPA was dated 22.8.2017 after being signed by the various other parties. The Plaintiff pointed out that it was illogical that the Defendants’ version of the SPA does not name WOI as a party when WOI was the party selling its Galasys shares to Shiji. The 2nd and 3rd Defendants also allege that the Plaintiff has sought to change his stance or improve his case after taking into consideration the defence filed in a prior suit filed by the Plaintiff which was subsequently discontinued with liberty to file afresh.

I am of the view that since the Plaintiff has obtained an expert report which opined that the signature on the Defendants’ version of the SPA which purports to be the Plaintiff’s signature is not really his, there is a bona fide triable issue whether the SPA or the Defendants’ version of the SPA was the correct SPA. There is an issue whether the Plaintiff’s signature on the Defendants’ version of the SPA was forged or otherwise mechanically procured.

The issues whether the Defendants had signed the WOI Resolution and the Settlement Agreement and the SPA ( which they dispute signing) are also issues which have to be tried. The trial dates are fixed in November 2018. 16

The case involves allegations of fraud, forgery and conspiracy to defraud so obviously there are serious disputes of fact and issues to be tried.

A summary of the payments which were supposed to have been made by Shiji under the SPA, payments that had been received and/or made by Shiji pursuant to the Defendants’ version of the SPA and payments that remain pending under the SPA are listed out below: Parties in receipt of payments Payments that are due from Shiji (3rd Tranche, Appendix-2 of the SPA) Payments that were made and received Payments due from Shiji (4th Tranche, Appendix-2 of the SPA) By Shiji on 4.9.2017 (3rd Tranche, Appendix-2 of the Defendant’s SPA By HCK and CTM from the Joint Bank Account SKW £1,045,687 £P878,812 £1,694,617 LKT £502,639 £545,539 £1,109,704 HCK £172,319 £137,284.00 £279,256 CTM £44,198 £114,494.00 £243,226 Wang Guan £183,190 Messrs Shui Tai (Advocates & Solicitors) - Client’s Account £762,241 £177,691.00 £1,235,271 Messrs Arthur Wang, Lian & Associates (Advocates & Solicitors) (the “Escrow Account”) £2,218,182 (RM12,200,00 Exchange Rate: 5.5) RM2,500,000 HCK and CTM (joint bank account) (the “Joint Bank Account”) £2,625,277 17

The next issue to be considered is whether damages would be an adequate remedy to the Plaintiff. It is settled law that an interim injunction should never be granted where damages are an adequate remedy and the Defendants are capable of paying damages. In the Court of Appeal case of RHB Bank Berhad v L & R Holdings Sdn Bhd [2011] 3 MLJ 162, it was held as follows: “[6] There should be no finding in this appeal on the merits of the claim or any defence to it (see The New Straits Times Press (M) Bhd v Airasia Bhd [1987] 1 MLJ 36). But on the facts, it would not seem clear that there was a bona fide serious issue to be tried. Also, in any case, it would not seem that the balance of convenience was in favour of the grant of the injunction. ‘If damages in the measure recoverable at common law would be adequate remedy and the defendants would be in a financial position to them no interlocutory injunction should normally be granted however strong the plaintiff’s claim appeared to be at that stage’ (American Cyanamid Co v Ethicon Ltd [1975] AC 396; [1975] 1 All ER 504 per Lord Diplock). The alleged damage was quantifiable. The defendant was a bank. The defendant was obviously in a position to pay whatever damages that could be awarded to the plaintiffs. Conversely, it would appear that the grant of the injunction would strip the defendant of its security without any surety to the defendant that the damage caused by the injunction could be undone. Unquestionably, greater injustice would be done by the grant of the injunction, especially so as 18 the injunction was wider than the alleged interest that it sought to protect, than by the refusal of it. The injunction should not have been granted”.

To overcome this hurdle, the Plaintiff relies on the argument of a constructive trust. The Plaintiff contends that he has adduced sufficient facts to establish a prima facie case that the Defendants hold monies to which they are not entitled and which they have, in effect, stolen from the Plaintiff through an unlawful scheme. The Defendants thus hold those monies as constructive trustee for the Plaintiff and the creditors. As far as the Plaintiff is concerned he has established on a prima facie basis that he has an equitable proprietary interest in the same. On this basis, equity presumes that monetary compensation is inadequate. The Plaintiff relies on the case of ESPL (M) Sdn Bhd v Radio & General Engineering Sdn Bhd [2004] 4 CLJ 674 where Gopal Sri Ram (JCA as he then was) said at p. 697: “It is a principle of general application in a Court of Equity that specific relief will not be granted where monetary compensation is a sufficient remedy. However, as an exception, once an equitable proprietary title under a trust is established, equity presumes that monetary compensation is inadequate and will grant specific relief, even if the subject matter of the trust consists of pure personality or a promise to create a trust. The decision in Fletcher v Fletcher [1844] 67 ER 564 amply exemplifies this approach. 19 In the present instance, the learned judge did not take the case before him through the various Keet Gerald steps. With much respect to him, he took a rather over simplistic approach. He merely said that since the amount of money that was due after the set-off claimed by the plaintiff was not certain he could not grant the injunctive relief sought. With respect we are unable to agree with this. As we have already said, what you have to look for in this case is the nature of the obligation and not the final figure after accounting for any asserted set-off. The plaintiff here was, beyond a doubt, under an obligation to pay into Account No. 1 all monies it received from Henz. That obligation was enforceable in Equity as a trust. The fact that it may have a mere contractual right of a set off against the defendant can make no dent in the case iron armour of the trust imposed upon the plaintiff’s conscience. That is a monetary claim that must await adjudication by the court”.

Now the 3rd Tranche of the Consideration has already been paid by Shiji pursuant to the Defendants’ version of the SPA. The Plaintiff seeks to restrain the Defendants from receiving payment of the 4th Tranche of the Consideration from Shiji pending trial. Pursuant to the SPA which the Plaintiff says is the correct agreement with Shiji, the Plaintiff was to receive a payment of GBP 1,694,617 whereas pursuant to the Defendants’ version of the SPA, the Plaintiff was to receive a sum of GBP 1,527,869. The difference is only GBP 166,748. The stakeholder for the Creditors is not scheduled to receive any payment 20 under the 4th Tranche so I do not have to consider the issue whether the Plaintiff can constitute himself as beneficiary for the payment to the stakeholder for the Creditors, the Plaintiff being one of the 5 Creditors. Under the 4th Tranche, Shiji was to pay a total sum of GBP 4,479,097 of which GBP 1,527,869 was to be paid to the Plaintiff and would no doubt be paid to the Plaintiff if the injunction sought is not granted. The Plaintiff’s claim to a constructive trust is a bit far fetched. In the ESPL case, the court held that there was clearly intention to create a trust. At page 684, the court said: “Was there an intention on the part of Henz and the plaintiff to create a trust for the defendant? Mr Davidson submitted that there was such intention. Having given the matter our utmost consideration, we are convinced that he is right. The language of cl. 27.1 is very clear. Look at the words the clause employs. It says “sub-contractor will receive the payments made by the contractor and will hold the right to receive such payments as a trust fund…” These are imperative words…But where, as here, parties to a transaction use imperative words, they must be taken to have intended to create the relationship of trustee and beneficiary.” In the present case, the Plaintiff submits that when the moneys are paid to the Defendants they hold them as constructive trustees for the Plaintiff. But the 4th Tranche payment has not been made so it cannot be said that the Defendants are trustees of any money for the benefit of the Plaintiff. Perhaps that is 21 why the Plaintiff only submits that he has a prima facie case to say that there is a constructive trust. A prima facie case is not sufficient to overcome the requirement to show that damages would not be an adequate remedy. In any event, the Plaintiff can at the most claim an equitable proprietary interest to GBP 1,694,617 out of the GBP 4,479,097 but he cannot claim an equitable proprietary interest in the whole of the 4th Tranche payment. Yet he wants to restrain the Defendants from receiving the whole of the 4th Tranche payment.

I am of the view that the Plaintiff cannot wholly rely on the case of ESPL and to contend that he does not have to show that damages would not be an adequate remedy. Because the Plaintiff cannot, even at the highest, claim an equitable proprietary interest in the whole of the 4th Tranche which he is seeking to restrain the Defendants from receiving from Shiji, he has to show that damages would not be an adequate remedy. Other than relying on the constructive trust point, the Plaintiff has not attempted to argue that damages would not be an adequate remedy. The Defendants are all Malaysians and the Plaintiff has not shown that they do not have assets in Malaysia. The Plaintiff says that they operate either in Hong Kong or China but that does not mean that they are not capable of paying damages to the Plaintiff. 22

If one goes on to consider the balance of convenience, one could see that if an injunction is not granted, the Plaintiff would only suffer a shortfall of GBP 166,748 because he would still be paid the GBP 1,527,869 pursuant to the Defendants’ version of the SPA. However, if the injunction is granted, the 2nd Defendant would be deprived of the payment of GBP 1,000,511, the 1st Defendant would be deprived of the payment of GBP 251,777 and the 3rd Defendant would be deprived of the payment of GBP 209,980 and Messrs Shui Tai Associates (clients account) would be deprived of a sum of GBP 1,235,271 and the joint account of the 1st and 3rd Defendants would be deprived of a sum of GBP 253,689. The balance of convenience is clearly in favour of not granting the interim injunction. It is to be noted that the stakeholder for the Creditors would not obtain any payment under the 4th Tranche.

I am therefore of the view that damages would be an adequate remedies to the Plaintiff and the balance of convenience is in favour of not granting an injunction and accordingly, no interim injunction should be granted.

I bear in mind what the Federal Court said in the case of AV Asia Sdn Bhd v MEASAT Broadcast Network Systems Sdn Bhd [2014] 1 LCJ 821 as follows: 23 “(3) ...(b) the grant of an injunctive relief is an equitable remedy...The principles for the granting of such a remedy must be strictly adhered to at all times... [6]

Based on the facts submitted by the parties, it appears to me that if the plaintiff were to succeed with its claim, he would be adequately compensated by an award of damages... ...

Thus, it is clear that damage is an adequate remedy for the plaintiff. [14] ...will cause irreparable injury...and that money damages will not provide an adequate remedy... [15] ...will suffer irreparable injury if such conduct is not prohibited... ... The grant of injunctive is an extraordinary remedy ...which should be granted only in limited circumstance... ... ...’there is no power the exercise of which is more delicate, which requires greater caution, deliberation and sound discretion, or more 24 dangerous in a doubtful case, than the issuing of an injunction; it is the arm of equity, that never ought to be extended unless to cases of great injury, where courts of law cannot afford an adequate or commensurate remedy in damages... It would represent an extraordinary variance from this basic principle for a court to recognize that the parties to a suit at equity have contracted around one of these fundamental elements. ‘It is a basic doctrine of equity jurisprudence that courts of equity should not act ... when the moving party has an adequate remedy at law and will not suffer irreparable injury if denied equitable relief.’...”

Before concluding, I will just deal summarily with the other contentions raised by Learned Counsel for the 2nd and 3rd Defendants.

One of them is that the injunction sought is imprecise, vague and consequently oppressive.

I have already set out the terms of the injunction sought by the Plaintiff. It clearly seeks to restrain the Defendants from receiving any payment from Shiji in respect of the Defendants’ version of the SPA or any other version of the SPA. The injunction sought is not imprecise or 25 vague and I would not agree with the 2nd and 3rd Defendants on this issue.

The 2nd and 3rd Defendants also raised the issue of delay on the part of the Plaintiff. The 2nd and 3rd Defendants allege that the Plaintiff had delayed by filing the application only after some 10 months. I also find that this issue is not substantiated. The Plaintiff had filed a prior action against the Defendants in January 2018 but that action was subsequently discontinued with liberty to file afresh on 30.3.2018 as the parties intended to go for mediation. Thereafter the matter was not settled and this action was filed on 22.5.2018. I am of the view that there was no inordinate delay on the part of the Plaintiff.

The 2nd and 3rd Defendants also relied on various alleged contradictions on the part of the Plaintiff, evasive answers of the Plaintiff and failure on the part of the Plaintiff to produce documentary proof demanded by the 2nd and 3rd Defendants to say that the Plaintiff has not come to court with clean hands. Suffice it to say that there are numerous issues and questions to be tried in this case and the 2nd and 3rd Defendants have not satisfied me that the Plaintiff has come to court with unclean hands. 26

The 2nd and 3rd Defendants also allege that the Plaintiff’s undertaking as to damages is worthless and they questioned the financial standing of the Plaintiff on the basis that the Plaintiff has not paid the Creditors. They say that the Plaintiff has not shown that he is capable of fulfilling his undertaking as to damages nor has he fortified his undertaking as to damages. The Plaintiff submits that his duty to provide full and frank disclosure of his financial position only arises when the Defendants have raised “genuine and realistic doubts as to the Plaintiff’s ability to honour” his undertaking. In Elegant Jump Ltd v Tribune Bridge Ltd & Ors [2000] 3 HKC 133 (HKCFI), Susan Kwan J said at pp 140-141: “I am unable to accept Mr Barlow’s submission here. In my view, on the evidence adduced by the defendants in support of this application (and I will deal with the evidence later), it cannot be said that realistic doubts have been raised about Mr Ronald Cheng’s ability to honour his undertaking. In these circumstances, I do not think it is incumbent on him to make full and frank disclosure of his financial position to demonstrate that he a able to honour his undertaking. What Ribeiro J (as he then was) said in the Wah Nam case is as follows (at pp 129C-F, 1291, 130F-131C): 27 It follows that if a plaintiff’s financial position is such that, viewed fairly, it may be said to raise realistic doubts as to the plaintiff’s ability to honour the cross-undertaking, it becomes incumbent upon the plaintiff to make full and frank disclosure of his financial position to the ex parte judge so as to permit the judge to determine for himself the correct order to make in the light of such disclosures. ... If the facts were such that the plaintiff came under a duty to make disclosure, it does not avail him to say that his non-disclosure was inadvertent ... Similarly, where genuine doubts can materially be raised and there has been a failure to disclose the questionable financial position, it is no answer for the plaintiff subsequently to argue, from a close analysis and calculation of his actual worth that he probably could meet any potential liability... In my judgment, on the evidence, the plaintiffs were, to say the least, in a highly precarious financial position, making its seriously questionable whether they would be able to honour their cross-undertaking. It was therefore incumbent on the plaintiffs to make full and frank disclosure of that position to the ex parte judge. ... 28 It was sufficient for Yuen J to hold that the evidence raised genuine and realistic doubts as to the plaintiff’s ability to honour their cross-undertaking in damages so that a failure to disclose the material circumstances at the ex parte stage constituted a material non-disclosure. In both Wah Nam and Manor Electronics, the defendants had adduced evidence before the court to raise genuine and realistic doubts as to the plaintiffs’ ability to honour their cross-undertakings in damages. It was in those circumstances that the courts held that the plaintiffs should come under a duty to make full and frank disclosure of their financial position and their failure to do so constitute material non-disclosure. As I would demonstrate when I deal with the evidence in this application, the present case is very different on the evidence when compared to the factual situations in Wah Nam and Manor Electronics. If I were to hold Mr Ronald Cheng would come under such a duty to make full and frank disclosure when the evidence adduced by the defendants did not give rise to any genuine doubt about his ability to honour his cross-undertaking, I would be allowing the defendants to fish for evidence when there is simply no justification for it”.

Although it would have been ideal for the Plaintiff to demonstrate his financial worth, the absence of the same is not fatal. The court, at the interim stage, is entitled to assume that the Plaintiff’s financial 29 position can address his undertaking. In Manor Electronics Ltd v Dickson [1988] RPC 618 (EWHC), Scott J said at p 623: “These cross-undertakings are the protection that the practice of the courts provides for persons subjected to interlocutory orders in case the orders should turn out to have been wrongly granted. The evidence in support of ex parte applications often includes some reference to the financial worth of the applicant. The purpose is to demonstrate that the cross-undertakings in damages will be honoured, if that should become necessary. I think, speaking for myself, that where there is no reference to the applicant’s financial worth, the assumption will be that the applicant’s financial substance is adequate for the purpose of the cross-undertaking that has to be given”.

I am in agreement with the Plaintiff on this point. The Creditors are creditors of WOI and the Plaintiff only allegedly guaranteed the debts of WOI. The Plaintiff is not primarily liable to pay the Creditors. I am of the view that the Plaintiff’s failure to make full and final disclosure of his financial position is not fatal.

In the premises, because I am of the view that damages will be an adequate remedy to the Plaintiff and the balance of convenience is in favour of not granting an injunction, I will not grant the interim injunction 30 or the ancillary order for accounts sought by the Plaintiff. I dismiss the Plaintiff’s application with costs in the cause. Wong Chee Lin Judicial Commissioner Kuala Lumpur High Court Commercial Division Dated: 19th September, 2018 31 Solicitors for the Plaintiff Arthur Wang, Malik Imtiaz, Hanan Mohamad Kamal & Khoo Suk Chyi Messrs Arthur Wang, Lian & Associates Advocates & Solicitors Unit No. 568-10 & 9-11 Level 9, Kompleks Mutiara 3 ½ Miles Jalan Ipoh 51200 Kuala Lumpur Tel : 03-6251 6363 Fax: 03-6251 6263 Solicitors for the 1st Defendant L K Tan & K K Mak Messrs K K Mak & Co Advocates & Solicitors No. 46 Tingkat 5, Jalan Kilang Midah Taman Midah 56000 Cheras Kuala Lumpur Tel : 03-9226 4929 Fax: 03-9171 0923 32 Solicitors for the 2nd & 3rd Defendants Lim Yap Thong & Chong Ka Yee (Pdk) Messrs Shui Tai Advocates & Solicitors Entrance 2, Suite 1308 13th Floor Block A, Damansara Intan No. 1, Jalan SS 20/27 47400 Petaling Jaya