Suasa Airlines Sdn Bhd v Neptune Aviation Ltd (WA-22NCC-127-04/2018)

SHEIKH SALLEH BIN SHEIKH ABOD (No. K/P: 530612-01-5261)

SUASA AIRLINES SDN BHD (No. Syarikat: 1159383-P) … DEFENDANTS

This case concerns prayers 8, 9 and 10 of a notice of application in enclosure 5 for Anton Piller Orders against the 1st and 2nd Defendants. On 11.4.2018, I granted orders in terms of the prayers in the notice of application on an ex parte basis, save for prayers 8, 9 and 10 thereof which I directed to be heard inter partes. Since then, the Plaintiff has 2 attempted to execute the Anton PillerOrders but did not succeed in doing so because they could not access the locations where the subject documents are suspected to be kept. The Plaintiff has served the cause papers on the 2nd Defendant on 26.4.2018 but has not succeeded in serving the 1st Defendant. The 2nd Defendant was present at the hearing of prayers 8, 9 and 10 on 14.5.2018 but informed the Court that it is not in the position to take any part in the proceedings due to lack of instructions. The counsel for the 2nd Defendant asked the Court to wait until the 1st Defendant was served before proceeding with the hearing but I decided to proceed with the hearing of prayers 8. 9 and 10.

After hearing the Plaintiff, I granted order in terms of prayers 8, 9 and 10 of the notice of application, with amendments. These are the full reasons for my decision.

The Plaintiff is a company incorporated as a Labuan company and the owner of an aircraft known as Boeing 737-400 aircraft bearing manufacturer’s serial number MSN 26452, 9M-MMX (“9M-MMX”). At all material times, the Plaintiff as the legal owner of Aircraft 9M-MMX owns all of the aircraft’s continuing airworthiness records, log books, weigh 3 schedule, manuals, maintenance reports, technical data and all other documents especially the Manuals and Technical Records (defined as “Aircraft Documentation”) relating to the aircraft together with any documents to release any encumbrance on the aircraft.

9M-MMX was in the process of re-registering in the Plaintiff’s name. However the Aircraft Documentation were removed, redirected and misappropriated by the Defendants from the Plaintiff’s business premises on 24.1.2018. The 1st Defendant was a director of the Plaintiff until 29.1.2018 and a director of the 2nd Defendant.

On 24.1.2018 the 1st Defendant together with representatives and employees of the 2nd Defendant took and removed the Aircraft Documentation and the Plaintiff’s Books, Records and Accounts (“Listed Items”) from the Plaintiff’s premises. The Aircraft Documentation and Listed Items are suspected to be kept at the premises of the 2nd Defendant.

The Plaintiff has sold the Aircraft 9M-MMX to a third party buyer known as Nasim Air (“Buyer”). The Plaintiff is obliged to deliver the aircraft together with the Aircraft Documentation to the Buyer upon 4 receipt of full purchase price. The 1st Defendant had signed the aircraft sale agreement dated 4.4.2017 as a director of the Plaintiff.

The Buyer has required the Plaintiff to deliver the aircraft on or by 2.6.2018 (subject to payment of full purchase price) failing which the Buyer will impose penalty of USD50,000.00 per day.

It is the contention of the Plaintiff that as a director of the Plaintiff, whilst the 1st Defendant may have the right to inspect the documents of the Plaintiff, he has no right to remove them from the Plaintiff’s premises. Furthermore, the 1st Defendant purported to act on the basis of circular directors’ resolutions which purported to say that the 1st Defendant has been appointed as Chairman of the Plaintiff. However, the company secretary had informed the 1st Defendant that the purported Circular Resolutions require verification. The Circular Resolutions were never registered by the Company Secretary and had been declared ineffective by the Plaintiff on 29.1.2018 on which date the 1st Defendant was removed as a director of the Plaintiff.

As the Defendants clearly have no right to remove and keep the Aircraft Documentation and the Listed Items which belong to the Plaintiff, 5 I granted the Anton PillersOrders sought by the Plaintiff on 11.4.2018 except for prayer 8, 9 and 10.

Prayers 8 is an interim mandatory injunction against the Defendants to compel the return to the Plaintiff of the Aircraft Documentation and the Listed Items in the scenario where the Anton PillerOrder is executed and the subject documents cannot be found. Prayer 9 is a restraining order to restrain the Defendants from using, destroying, parting with possession, converting the Aircraft Documentation and Listed Items, unlawfully interfering with the Plaintiff’s trade and business and conspiring and agreeing to commit unlawful acts to interfere with the Plaintiff’s trade and business pending the disposal of the action and prayer 10 is for liberty to the Plaintiff to use the Aircraft Documentation and Listed Items for the purpose of these proceedings and with the leave of the court in any other proceedings against the Defendants.

In support of prayer 8, the Plaintiff relied on the case of Locabail International Finance Ltd v Agroexport and others; The Sea Hawk [1986] 1 All ER 901 where the English Court of Appeal laid out the test 6 to be applied for the grant of an interlocutory mandatory injunction as follows: “I shall deal first with the question of the test which is to be applied. In my judgment this is correctly stated in 24 Halsbury’s Laws (4thedn) para 948 in a passage headed ‘Mandatory injunctions on interlocutory applications’. That passage reads: ‘A mandatory injunction can be granted on an interlocutory application as well as at the hearing, but, in the absence of special circumstances, it will not normally be granted. However, if the case is clear and one which the court thinks ought to be decided at once, or if the act done is a simple and summary one which can be easily remedied, or if the defendant attempted to steal a march on the plaintiff ... a mandatory injunction will be granted on an interlocutory application.’ One of the cases cited in support of that passage is the decision of Megarry J in Shepherd Homes Ltd v Sandham [1970] 3 All ER 402, [1971] Ch 340; in the course of his judgment Megarry J said [1970] 3 All ER 402 at 412, [1971] Ch 340 at 351): ‘Third, on motion, as contrasted with the trial, the court is far more reluctant to grant a mandatory injunction than it would be to grant a comparable prohibitory injunction. In a normal case the court must, inter alia, feel a high degree of assurance that at the trial it will appear 7 that the injunction was rightly granted and this is a higher standard than is required for a prohibitory injunction.”

The English Court of Appeal went on to state that the principle above is not affected by the test in American Cyanamid Co. V Ethicon Ltd [1975] 1 All ER 504 because an interlocutory mandatory injunction, if granted, would amount to the grant of a major part of the relief claimed in the action. Such an application should be approached with caution and the relief granted only in a clear case.

In Tinta Press SdnBhd v Bank Islam Malaysia Bhd [1987] 2 MLJ 192 at page 194 (SC), the Supreme Court applied a test consistent with the test in Locabail and held that the discretion to grant an interlocutory mandatory injunction must only be exercised in exceptional and extremely rare cases. The case must be unusually strong and clear in that the Court must feel assured that a similar injunction would probably be granted at the trial.

In Cekal Berjasa Sdn Bhd v Malaysia Building Society Bhd [2005] 3 MLJ 646 (HC), the Court found that the Defendant in that case had acted unreasonably and/or mala fide and/or in breach of a settlement agreement entered between the Plaintiff and the Defendant. 8 This was found to constitute a special circumstance justifying the grant of an interlocutory mandatory injunction.

In the present case, the Aircraft Documentation and the Listed Items indisputably belong to the Plaintiff. They do not and cannot conceivably be said to belong to the 2nd Defendant and the 2nd Defendant can have no basis for claiming to be legally entitled to possession of the subject documents.

What the 2nd Defendant did in entering upon the Plaintiff’s premises and removing the Aircraft Documentation and the Listed Items clearly amount to a conversion of the Plaintiff’s property. To date, the 2nd Defendant has yet to file any affidavit in reply and is thus taken to admit to the facts asserted by the Plaintiff through the Plaintiff’s affidavits in support. The 2nd Defendant was served on 26.4.2018. (see Ng Hee Thong & Anor v Public Bank Bhd [1995] 1 MLJ 281 at page 286)

Accordingly, I am of the view that there exist special circumstances and the case is a clear on where the grant of an interim mandatory injunction can be supported. As such, I order the 2nd Defendant to deliver up the Aircraft Documentation and Listed Items to the Plaintiff within 14 days after service of the Order on the 2nd Defendant. 9

Prayer 9 of enclosure 5 is framed as a prohibitory injunction. It is complementary to prayer 8 in that it seeks to prevent any damage being done to the Plaintiff’s property and business pending determination of this suit as well as prevent the use of the Listed Items by the Defendants.

The principles in respect of the grant of a prohibitory injunction are set out in KeetGeral Francis Noel John v Mohd Noor Bin Abdullah & Ors [1995] 1 MLJ 193 where the Court of Appeal referred to American Cyanamid Co. v Ethicon Ltd [1975] 1 All ER 504. The applicable principles may be summarised as follows: i) Principle 1: The Court is to determine whether there is bona fide serious question to be tried. At this stage, the Court does not make a determination on the merits of the claim or defence to it. It is sufficient for the Court to identify with precision the issues raised on the joinder and whether these are serious enough to merit a trial. See also: Si Rusa Beach Resort Sdn Bhd v Asia Pacific Hotels Management Pte Ltd [1984] 1 MLJ 132 at page 1351 right column. 10 ii) Principle 2: If there is a serious question to be tried, the Court then considers where the justice of the case lies. If after weighing all matters, the Court comes to the conclusion that the applicant would suffer greater injustice if relief is withheld, then he would be entitled to grant the injunction especially if he is satisfied that the applicant is in a financial position to meet his undertaking in damages. iii) Principle 3: The Court is to bear in mind that the remedy is to produce a just result for the period between the date of the application and the trial proper and is intended to maintain the status quo.

In determining whether there is a serious question to be tried, it is submitted by the Plaintiff that the following questions may arise for determination: i) whether the Defendants had committed a tort of conversion removing the Listed Items from the possession and custody of the Plaintiff from the Plaintiff’s premise and refusing to return the same; 11 ii) whether the actions of the 1st Defendant, who was then the director of the Plaintiff at the time of removal of the Listed Items from the Plaintiff’s premises, constituted a breach of his fiduciary and/or statutory duty as a director of the Plaintiff and misuse of his power as a director of the Plaintiff.

As regards the balance of convenience, the Plaintiff’s position is that it would suffer irreparable damage if the injunction is not granted because the Listed Items do not merely involve the Subject Aircraft but also books, records and accounts of the Plaintiff which are required by it for the conduct of its business as well as to ensure that it complies with various law. Further, the Plaintiff would be in breach of its contractual obligations to Nasim if the Aircraft Documentation is, in any way damaged.

The Defendants have no discernible right to the Listed Items. It follows that they ought not to be able to use the Listed Items in any way.

It is submitted that it is unclear as to whether the 2nd Defendant is still operating as a business. This can be seen from affidavits of the solicitors for the Plaintiff and the supervising solicitors who found the 12 premises where the 2nd Defendant should be operating its business (Schedule 1 of Enclosure 5) empty when they were there to serve and executed the sealed Anton Piller Order. Yap Vern-Chieh, Gary’s Affidavit (Enclosure 20) states that he was informed by two people who work in a mechanic workshop nearby the 2nd Defendant’s Ara Damansara office that they hardly see anyone going into the 2nd Defendant’s said office. Another lady who works in the adjacent office to the 2nd Defendant’s Ara Damansara Office said the 2nd Defendant is no longer in business operation and all the staff had left the office. This casts doubt as to whether the 2nd Defendant is in a financial position to provide an adequate remedy to the Plaintiff in the event of the Plaintiff succeeding at trial and is awarded damages.

In the event the injunction is granted and the Defendants should succeed at the trial, the damage caused to the Defendants would be minimal as the running of their business would not be affected by the injunction. The Plaintiff submits that neither of the Defendants have the legal right or ownership to the Listed Items and therefore cannot be said to be affected by being prohibited from using such items.

Given the above, I am of the view that the balance of convenience and the justice of this case clearly lies in favour of the Plaintiff. 13

As regards Principle 3 i.e. maintaining the status quo, in Dato’ Jaffar Mohd Ali & Anor v Jasatera Bhd & Ors [2000] 2 MLJ 277 (Court of Appeal) at page 279 G to page 280 C, it was held that in deciding whether and how to maintain the status quo, a judge should direct his mind to the state of affairs as it existed before the events leading up to the suit. Where a judge considers the situation only as it exists after these events have occurred, he falls into error and will have failed to address his mind correctly on the question of status quo.

As such, I agree with the Plaintiff that the interim injunction in terms of prayer 9 ought to be granted to preserve the status quo.

Prayer 10 is sought merely to allow the Plaintiff to use the Listed Items returned to it pursuant to prayer 8 for purposes of its business. This is in recognition of the fact that the Listed Items belong to the Plaintiff and are required by it for conduct of its business. Further the Plaintiff seeks leave to use any information, documents or material obtained as a result of this Order for purposes of these proceedings and other potential proceedings. This prayer is ancillary or complementary to prayers 8 and 10 and therefore should be granted. 14

I agree with the Plaintiff’s submission that prayer 10 ought to be granted as well.

Accordingly, I grant order in terms of prayers 8, 9 and 10 of the notice of application in enclosure 5. Wong Chee Lin Judicial Commissioner Kuala Lumpur High Court Dated: 25th June 2018 15 Solicitors for the Plaintiff Shamala Devi A/P Balasundaram & Michelle Khor Chiew Hong Messrs Chooi & Company Advocates & Solicitors Level 5, Menara BRDB 285 Jalan Maarof, Bukit Bandaraya 59000 Kuala Lumpur Tel : 03-2055 3888 Fax: 03-2055 3880 Solicitors for the 2nd Defendant Cherian Kururila Messrs Zubeda & Amarjeet Advocates & Solicitors B5-7-6, Block 5, 7th Floor Unit 6, VSQ @ PJCC Jalan Utara, 46200 Petaling Jaya, Selangor