Tam Mei Mei & 10 Ors v Quastone Capital Sdn Bhd (WA-22NCC-32-01/2021)

TAM MEI MEI Hong Kong Identity Card No.: G554384(2) (Canadian Passport No. HG056265)

CHENG KAM WOON, GARI Hong Kong Identity Card No.: G344037(A) (Hong Kong SAR, People’s Republic of China

CHIU SIU MEI PAULINE Hong Kong Identity Card No.: G608797(2) (Hong Kong SAR, People’s Republic of China

LAI SIU TO Hong Kong Identity Card No.: K337480(7) (Hong Kong SAR, People’s Republic of China

LAU KA PIK Hong Kong Identity Card No.: K621675(7) (Hong Kong SAR, People’s Republic of China

LAU YI YAN Hong Kong Identity Card No.: Z285315(A) (Hong Kong SAR, People’s Republic of China

LUI WING YIN Hong Kong Identity Card No.: Z234621(5)) (Hong Kong SAR, People’s Republic of China Passport No. K03678799) 2

WAN FU KEUNG Hong Kong Identity Card No.: K903237(1) (Hong Kong SAR, People’s Republic of China

TUNG KAI FUK DAVID Hong Kong Identity Card No.: D505164(A) (Hong Kong SAR, People’s Republic of China

YUNG MAN YUNG Hong Kong Identity Card No.: V009968(6) (Hong Kong SAR, People’s Republic of China

SIT WAN FONG HENRIETA Hong Kong Identity Card No.: E991763(6) (Hong Kong SAR, People’s Republic of China Passport No. K04813873) …PLAINTIFFS AND QUASTONE CAPITAL SDN BHD (Company No.:1106447-W) …DEFENDANT GROUNDS OF JUDGMENT Introduction [1] The Defendant in this suit filed an application documented in enclosure 29 pursuant to Order 18 rule 19 (a) and/or (b) and/or (d) and/or Order 92 rule 4 of the Rules of Court 2012 to strike out the Plaintiffs’ Amended Writ and Amended Statement of Claim. 3 [2] At the conclusion of the hearing, this Court allowed the application. Dissatisfied, the Plaintiffs appealed against the decision. The following are the Grounds of Judgment of this Court. Background facts [3] The Plaintiffs are individuals residing in Hong Kong. The Defendant is a private limited company incorporated in Malaysia. [4] The Plaintiffs entered into 11 Sale and Purchase Agreements (“the Agreements”) with the Defendant to purchase selected durian trees planted on the lands owned by the Defendant as stated at paragraphs 1 (a), (b) and (c) of the Ex-Parte Order (“the Lands”). [5] The particulars of the Agreements allegedly entered into with the Defendant are set out in tabular form as found at paragraph 16 of the Amended Statement of Claim dated 3.2.2021 (“Amended SOC”) as reproduced below: Purchaser Date of Sale and Purchase Agreement No. of Durian Trees Purchased Purchase Price ( USD) SPA Period Buy-Back Date 1st Plaintiff 11.1.2018 5 durian trees 40, 020 2 years 11.1.2020 2nd Plaintiff 23.11.2017 10 durian trees 80, 040 5 years 23.11.2022 3rd Plaintiff 23.11.2017 3 durian trees 24, 012 5 years 23.11.2022 4 4th Plaintiff 23.11.2017 6 durian trees 45, 948 5 years 23.11.2022 5th Plaintiff 20.11.2017 4 durian trees 32, 016 5 years 20.11.2022 6th Plaintiff 4.1.2018 3 durian trees 24, 012 5 years 4.1.2023 7th Plaintiff 17.11.2017 2 durian trees 15, 316 5 years 17.11.2022 8th Plaintiff 17.11.2017 1 durian trees 8, 004 5 years 17.11.2022 9th Plaintiff 16.11.2017 3 durian trees 24, 012 5 years 16.11.2022 10th Plaintiff 13.11.2017 3 durian trees 24, 012 5 years 13.11.2022 11th Plaintiff 30.11.2017 1 durian trees 8, 004 5 years 30.11.2022 [6] The Defendant allegedly created and caused an entity known as Maslow Business Consulting Company Limited (“Maslow”) to be incorporated in Hong Kong, to enter into tenancy agreements with the Plaintiffs. The Plaintiffs were promised that Maslow will pay rentals until the buy-back of the durian trees from the Plaintiffs by the Defendant. [7]

(a) for not having a reasonable cause of action. This is based on the fact that nowhere was it ever been pleaded in the Amended Statement of Claim who were the directors, servants or agents that had purportedly sign the Agreements or acted at the material time on behalf of the Defendant. [11] The Defendant further contended that pursuant to Order 18 rule 19

(b) and (d), the endorsement of claim in the Amended Writ and Amended Statement of Claim is scandalous, frivolous or vexatious and an abuse of the Court process since the Plaintiffs, despite being fully aware that they sued the wrong party, proceeded with their claim against the Defendant. [12] In resisting the application, the Plaintiffs submitted that from the facts presented, the action is sustainable on solid cause of action 6 and raises questions which must be tried. It is not a matter which ought to be struck out. Analysis Order 18 rule 19 (1) (a) [13] In considering an application to strike out a case under Order 18 rule 19 (1) (a), this Court is guided by the decision of Zawawi JCA (as he then was) in Tan Wei Hong (a child suing through his guardian ad litem and next friend, Chuang Yin E) & Ors v. Malaysia Airlines System Bhd & Ors [2018] 2 CLJ 84; [2017] 4 MLJ 540 where the guidance given are as follows : “[7] The court will adopt the following as principles applicable to the consideration of an application to strike out pleadings and endorsements:

in considering the defendants' application under O. 18 r. 19(1)(a), no affidavit evidence is admissible;

all the averments in the statement of claim must be assumed to be true;

the court should only exercise its powers sparingly and only in clear cases;

the test to be applied is whether on the face of pleadings, the claim is obviously unsustainable. The matter must be unarguable or almost incontestably bad;

the burden is on the defendants to show to the court that the plaintiffs' claim is so plain and obviously unsustainable or in other words, the plaintiffs' claim is bound to fail at trial.” (Emphasis added) 7 [14] Thus, an application under Order 18 rule 19 (1) (a) mandates this Court to examine purely on the face of the pleadings, whether there is a reasonable cause of action established by the Plaintiffs. For this reason, the assessment of the pleadings filed into the Court is key. [15] The case of the Plaintiffs is one that anchors on a breach of contract. It must therefore be premised on facts showing that the Defendant is legally bound by the 11 Sale and Purchase Agreements. [16] The Defendant was clear in its position where it was pleaded that the Plaintiffs have no cause of action as there is nothing on the facts that can bind the Defendant to the Agreements. The amended Statement of Claim [17] It is therefore critical that the identification of who entered into the Agreements on behalf of the Defendant and the capacity of the signatory to the Agreements must be pleaded with clarity. It is the finding of this Court that there was an absence of the necessary pleadings in the Amended Statement of Claim, as only the following were pleaded:

17.1 Paragraph 14: That the Plaintiffs entered into the respective Agreements with the Defendant to purchase selected durian trees planted on the Lands; 8

17.2 Paragraph 16: That the particulars of the Agreements and their dates from November 2017 to January 2018 entered into with the Defendant are set out in the Table A of the Amended Statement of Claim.

17.3 Paragraphs 19 and 20: That the Defendant allegedly created and caused Maslow to be incorporated in Hong Kong, to enter into tenancy agreements with the Plaintiffs.

17.4 Paragraphs 22 and 23: That pursuant to the Agreements, the Defendant shall buy back the durian trees within two (2) years, which the Defendant has failed and/or refused to respond to the demand made by the 1st Plaintiff and anticipatorily with regards the rest of the Plaintiffs. [18] As the Plaintiffs clearly pleaded that the Defendant is a private limited company, in law, it can only act through its directors, servants or agents. However, this Court is unable to find where in the Amended Statement of Claim was pleaded who were the directors, servants or agents that had signed the Agreements dated from 16.11.2017 to 11.1.2018, or acted at the material time on behalf, of the Defendant company. [19] It is incumbent on the Plaintiffs to plead that the Defendant is bound by the Agreements and any arrangement flowing from the Agreements. 9 The Defendant’s Defense [20] From the Defendant’s Defense, the following pleaded facts were:

20.1 Paragraph 9.1: That the Defendant’s two (2) current directors, Chiew Wan Wah and Chong Kiam Peh, were only appointed as directors from 7.2.2020;

20.2 Paragraph 9.3: Provides the Corporate Information and Particulars of the Directors (previous and current) of the Defendant company;

20.3 Paragraph 9.4: From the Agreements in regard to their stated dates and directors of the Defendant (who signed for the Defendant) shows that Zeng Yong signed the Agreements as authorized representative or Director;

20.4 Paragraph 9.5: From the Agreements, particularly the purported Extract of Minutes of Board Meeting in Shenzhen, China (“Board Minutes”) dated 22.9.2017 show that Low Yu Seng, Zeng Yong and Mai Huan Rong signed the Board Minutes as

20.5 Paragraph 9.6: From the purported Agreements, particularly the purported Extract of Minutes of Extraordinary General Meeting in 10 Shenzhen, China (“EGM Minutes”) dated 22.9.2017 included in the Agreements, show that Low Yu Seng, Zeng Yong and Mai Huan Rong had purportedly signed the Agreements as Shareholders. [21] On the pleaded case of the Plaintiffs vide the Amended Statement of Claim, it is patently obvious to this Court that the Plaintiffs have failed to establish whether the signatories of the Agreements and the EGM minutes were authorized officers of the Defendant. They failed to demonstrate on the pleadings that they had authority to act on behalf of the Defendant. [22] The persons who purportedly signed the Agreements, Board Minutes and EGM Minutes were not directors or shareholders at that material times. The table identifying the relevant dates is reproduced as follows: Particulars of Defendant Company Directors (Previous and Current) Name Date of Appointment Date of Resignation Tan Eng 26.8.2014 16.11.2015 Ang Lam Aik 16.11.2015 5.4.2018 Ang Ken Seng 26.8.2014 5.4.2018 Ang Lily 26.8.2014 16.11.2015 Ang Lam Keong 26.8.2014 5.4.2018 Low Yu Seng 4.4.2018 7.2.2020 Zeng Yong 4.4.2018 7.2.2020 Mai Huanrong 4.4.2018 6.5.2019 11 Leung Yung Tai 6.5.2019 7.2.2020 Chong Kiam Peh 7.2.2020 - Chiew Wan Wah 7.2.2020 - [23] Juxtaposing the Defense and the Amended Statement of Claim, it can be seen that Zeng Yong was only appointed a Director of the Defendant on 4.4.2018, that is after the stated date of all the Agreements. [24] Similarly, Low Yu Seng, Zeng Yong and Mai Huan Rong who signed the minutes of the Board meeting as Directors only became Directors of the Defendant on 4.4.2018, that is after the stated date of all the Board Minutes. They only became shareholders of the Defendant from 22.6.2018, that is after the stated date of the EGM Minutes. [25] This Court agrees with the Defendant’s contention as pleaded in paragraphs 10 and 11 of the Defense. Had the Plaintiffs or their solicitors or consultants done the requisite company checks or simple due diligence, the results would show that:

Zeng Yong who signed the Agreements as Director had no authority to do so as he was not a Director of the Defendant at the material time, and nothing at all is pleaded about him having been authorized to do so; 12

(ii) Low Yu Seng, Zeng Yong and Mai Huan Rong who signed the Board Minutes dated 22.9.2017 had no authority to do so as they were not Directors of the Defendant at the material time; and

(iii) Low Yu Seng, Zeng Yong and Mai Huan Rong who signed the EGM Minutes dated 22.9.2017 had no authority to do so as they were not Shareholders of the Defendant at the material time. [26] The abject failure of the Plaintiffs in making the necessary verification did not assist them in defending their position. [27] A clear instance where the failure of a plaintiff to properly identify a proper party resulted in the action being struck out under Order 18 rule 19 (1) (a) can be seen in a recent decision of the Court of Appeal in Pemilik-Pemilik dan/atau Pencarter-Pencarter Demis Tongkang atau Vesel ‘Wantas 17’ v Pemilik-Pemilik Kapal atau Vesel ‘My Ferry 2’ [2021] MLJU 738. The plaintiff failed to identify the actual perpetrator of the incident from the latest incident report. The Court held: [41]In the present case, we find that the error made by the Respondent in citing and suing the owner of the 1st Defendant's Tugboat which was not towing the Appellant's Dumb Barge at the material time, is much more serious than the errors stated in the above authorities as the Respondent have instituted legal proceedings against the owner of the wrong tugboat. The Respondent sued the owner of the 1st Defendant instead of the owner of the 3rd Party's Tugboat. The Respondent apparently relied on the Laporan Kemalangan Perkapalan (Report 13 of a Shipping Casualty) dated 1/1/2017 which had been amended on 10.01.2017, which showed that initially the 1st Defendant's Tugboat was involved in the collision but this was later amended to state that the 3rd Party's Tugboat was involved in the collision and not the 1st Defendant's Tugboat. The Respondent is in possession of the duly amended Laporan Kemalangan Perkapalan (Report of a Shipping Casualty) dated 1/1/2017 which marked as Exhibit "KAR-1" and annexed to the Affidavit in Support of Ku Azhar Bin Abdul Razak filed in support of the Respondent's application for a Warrant of Arrest against the Appellant's Dumb Barge (refer to page 129 of Rekod Rayuan - Jilid 2A (Bahagian B dan C). [42]We are of the considered view that th)e Learned HCJ's findings that whether it is the 1st Defendant's Tugboat or the 3rd Party's Tugboat which towed the Appelant 's Dumb Barge at the time of the collision is irrelevant, is a serious misdirection as the identity of the tortfeasor or wrong doer is crucial otherwise the Respondent's cause of action is incomplete. (Emphasis added) [28] Therefore, the failure of the Plaintiffs to make the proper due diligence and in particular, the proper searches was detrimental to the Plaintiffs’ case as otherwise, it would reveal the proper party to be sued to ensure that the cause of action is complete. The Reply of the Plaintiff [29] The Plaintiffs filed their Reply which pleaded, inter alia, as follows: 14

29.1 Paragraph 4: That “Defendant’s knowledge cannot be confined to knowledge of its current directors”;

29.2 Paragraphs 5 (a), (b) and (c): That the Defendant is bound by the Agreements because Low Yu Seng, Zeng Yong and Mai Huan Rong, had acted on the Agreements before or after 4.4.2018 which is the date of their appointments per the Companies Commission of Malaysia (“SSM”) search;

29.3 Paragraph 5 (d): That the Defendant had made representation based on the Agreements and tenancy agreements which was not with the Defendant as a party either through its previous directors (including Zeng Yong and Low Yu Seng) and its agent, GET Financial Advisors Limited and Maslow;

29.4 Paragraph 6: That based on the representations by its previous directors, the Defendant is estopped from denying the existence and validity of the Agreements;

29.5 Paragraph 7: That the Plaintiffs are entitled to rely on the internal management rule; and

29.6 Paragraph 8: That the Defendant has been unjustly enriched. 15 [30] This Court makes the following observations on the Reply filed by the Plaintiffs. [31] Paragraph 4 of the Reply seems to suggest that the knowledge of the previous directors must also be considered. However, without joining or pleading against the purported Low Yu Seng, Zeng Yong and Mai Huan Rong, this averment is essentially a non-starter. [32] The averment that the conduct of the three (3) individuals mentioned in paragraph 5 (a), (b) and (c) of the Plaintiffs’ Reply is a contradiction and an afterthought. The Plaintiffs contradict themselves as the Defense clearly pleads that at the dates of the Agreements, Low Yu Seng, Zeng Yong and Mai Huan Rong, were not yet appointed as directors or shareholders. Furthermore, the tenancy agreements were not entered between Maslow and the Defendant. [33] The Plaintiffs’ submission that Maslow was used to rent the subject durian trees from the Plaintiffs and by virtue of Zeng Yong being a director of both Maslow and the Defendant as at 3.6.2019, therefore “the Plaintiff had been paid rentals for their respective durian tress” is a difficult proposition to accept. [34] If at all, this is a purported cause of action against Maslow and not against the Defendant. There is clearly an absence of nexus between Maslow and the Defendant. [35] As the Defendant’s pleaded case is that it did not have any relations or knowledge about Maslow nor did it receive any 16 payment from the Plaintiffs under the Agreements, it is illogical for the Plaintiffs not to realise that the parties they should be suing for their alleged cause of action is really Maslow and the three (3) individuals namely Low Yu Seng, Zeng Yong and Mai Huan Rong. [36] This Court finds the contention at paragraph 6 of the Reply to be a bare statement without basis as it ignores the fact that at the dates of the Agreements, Low Yu Seng, Zeng Yong and Mai Huan Rong were not yet appointed as directors or shareholders. The Defense on the other hand, had specifically pleaded so. [37] They were not directors at the material times of the Agreements. As such, there could not have been any representations that could amount to an estoppel. In short, their purported actions could not legally bind the Defendant as a company. [38] With respect, Plaintiffs reliance on the Indoor Management rule as propounded in Royal British Bank v Turquand (1856) 6 E&B 327, is respectfully misconceived. The internal management rule has been wrongly applied and relied on by the Plaintiffs. The Defendant cannot be made liable for such errors on the Plaintiffs’ part. [39] The Federal Court in Pekan Nenas Industries Sdn Bhd v Chang Ching Chuen [1998] 1 CLJ 793 dealt with irregularities in resolutions (and not facts which the purchaser could have discovered with reasonable diligence) by holding as follows: 17 “[1] The effect of the Turquand Rule is that it reduces the enquiries which outsiders having dealings with a company must take. Such outsiders have no right to insist on proof by the company’s directors that the provisions of its Memorandum & Articles have been complied with, and they cannot therefore be deemed to have constructive notice of some failure to comply which they have no means of discovering. [1a] An outsider, however, cannot invoke the benefit of the Turquand Rule if he is put upon inquiry. He cannot therefore presume that things are rightly done if inquiry that he ought to have made would tell him that they were wrongly done. Whether in any given case, the person dealing with a company is put to inquiry, must depend upon all the particular circumstances.” [40] The case of Pekan Nenas is a clear example of how the Turquand Rule is applied. It aims to aid a party when dealing with a company. On the contrary, it does not take away the duty of verifying the basic principles of proper parties to an action which is certainly incumbent on the party embarking on a legal action to ascertain the proper parties to the suit. A failure to do so will be at the peril of the party failing to make the necessary [41] The Court of Appeal in Bumiputra-Commerce Bank Bhd. V. Augusto Pompeo Romei & Anor [2014] 6 CLJ 17 in dealing with an issue that a Director’s Resolution had been forged, held that the rule applied in that case because the defendants were lawful directors at the material time and stated the original rule in Turquand’s case thus: 18 “[37] Under this rule, which is commonly referred to as the Turquand’s Rule or the internal management rule, Lord Campbell CJ enunciated the principle as follows:- … persons contracting with a company and dealing in good faith may assume that acts within its constitution and powers have been properly and duly performed, and are not bound to inquire whether acts of internal management have been regular.” [42] The Turquand Rule aids the transacting parties but it does not extend to the duty of ensuring that proper due diligence is done before commencing legal action. Had a proper due diligence exercise is carried out, it would identify the proper party to be sued and protect unrelated and unconnected parties from being embroiled in litigation. [43] On the averment that the Defendant stood to unjustly enriched, this Court finds that nowhere has the Plaintiffs ever pleaded that they had paid the Defendant any payment(s) due under the Agreements. This contention cannot stand. [44] The issue therefore boils down to whether Plaintiff has establish a valid cause of action against the Defendant based on the settled principles of law. In Newacres Sdn Bhd v Sri Alam Sdn Bhd [1991] 3 MLJ 474, the Supreme Court expounded the meaning of “Cause of Action” by making reference to established cases. The Supreme Court held: 19 “Perhaps, it would be enlightening if we say a few words on the meaning of the term 'cause of action'. In Cooke v Gill (1872-73) 8 LR CP 107, Bovill CJ at p 116 defines 'cause of action' as follows: Cause of action has been held from the earliest times to mean every fact which is material to be proved to entitle the plaintiff to succeed — every fact which the defendant would have a right to traverse. In Read v Brown (1889) 22 QBD 128 at p 131 Lord Esher MR has this to say on the real meaning of the phrase 'cause of action': … it has been defined in Cooke v Gill LR 8 CP 107 to be this: every fact which it would be necessary for the plaintiff to prove, if traversed, in order to support his right to the judgment of the court. It does not comprise every piece of evidence which is necessary to prove each fact, but every fact which is necessary to be proved. The modern definition of 'cause of action' is, as stated in Letang v Cooper [1965] 1 QB 232 at pp 242-243 per Diplock LJ, simply a factual situation the existence of which entitles a person to obtain from the court a remedy against another person.” [45] Similarly, the Court of Appeal in Pemilik-Pemilik dan/atau Pencarter-Pencarter Demis Tongkang atau Vesel ‘Wantas 17’ v Pemilik-Pemilik Kapal atau Vesel ‘My Ferry 2’ (supra) also discussed the term and held as follows: “[43] It is apposite to define the phrase "cause of action". It means 'simply a factual situation the existence of which entitles one person to obtain from the court a remedy against another person': per Diplock LJ in Letang v. Cooper [1964] 2 All ER 929 at p 934. See also Lim Kean v. Choo Koon [1970] 1 MLJ 158, Nasri v. Mesah [1971] 1 MLJ 32 (FC), 20 Saw Gaik Beow v. Cheong Yew Weng & Ors [1989] 3 MLJ 301, Newacres Sdn Bhd v. Sri Alam Sdn Bhd [1991] 3 MLJ 474 (SC), and Credit Corporation (M) Bhd v. Fong Tak Sin [1991] 1 MLJ 409 (SC), as found in Malaysian Court Practice 2007 Desk Ed LexisNexis at p 144.” [46] On the analysis and comparison of the pleadings, it is plainly obvious that the Plaintiffs have failed to establish a cause of action against the Defendant. There is an integral link between the Plaintiffs and the Defendant that is unambiguously missing - the authority to bind the Defendant. The Defendant had rightly applied to strike out the claim under Order 18 rule 19 (1) (a). Order 18 rule 19 (1) (b) and (d) [47] The other limbs that come into consideration are limbs (1) (b) and

(d) of Order 18 rule 19 (1) namely: Order 18 rule 19 (1)

It is scandalous, frivolous or vexatious; and/or

It is otherwise an abuse of the process of the court [48] With the evidence available before this Court in particular to the contents of the Affidavits of the Defendant, it is clear that from the undisputed public documents such as the SSM searches that the Plaintiffs have sued the wrong party. 21 [49] It open for this Court to also deduce that if what the Plaintiffs aver are true, then their claim ought properly to be against the three (3) purported individuals; Low Yu Seng, Zeng Yong and Mai Huan Rong. [50] What is evident to this Court is the failure of the Plaintiffs to demonstrate whether the Defendant was a proper party to the Agreements. What is crucial is whether Zeng Yong had the legal right to enter into the Agreements to bind the Defendant. The emphatic answer to this is no. [51] It is clear that all the acts of Zeng Yong were carried out by him acting in his own capacity, without the authority as an officer of the Defendant. At the point of execution of the Agreements, he had no authority to act on behalf of the Defendant. This is evident from the analysis carried out by this Court. [52] This Court is persuaded by the argument of the Defendant that had a proper search been carried out, the proper defendants will surface. These were the individuals who purportedly entered into the Agreements on behalf of the Defendant. [53] The Agreements were not authorised nor do they bind the Defendant as they were purportedly signed by person who was neither director, nor shareholder, nor were there any valid Board resolutions passed, in that regard. The Federal Court in Kang Hai Holdings Sdn Bhd v Lee Lai Ban [2018] 2 CLJ 550 held as follows: 22

“The tenancy agreement described the landlord as LTH, not KHH, who was the registered owner of the land. Looking at the position of the companies at the time when the tenancy agreement was entered into, in respect of KHH as at 13 September 2008, Siva had ceased to be a director whilst LTH continued to remain a director. In the case of KHR, whilst LTH was a director, Siva was not a director. (para 10)

KHH and KHR’s plea of representation of authority was against Siva and the specific representation that Siva was the MD/director of both companies at the time of execution of the tenancy agreement and the extraction of sand from the plaintiffs’ lands. The searches clearly revealed that Siva was not a director nor MD of the plaintiffs’ companies and Lee was deemed to have constructive knowledge of, and it did not matter whether he believed, by reputation or otherwise, that Siva was. (paras 11 & 12)

Lee, who was the ‘outsider’ herein, did not verify the position of Siva in the plaintiffs’ companies by way of a search. Lee did not check on the status of the land and all payments were made to Siva. The law imposes a minimum duty on the ‘outsider’ to, at the very least, make the minimum check to afford the outsider the protection of the rule in Turquand’s case.” (Emphasis added) [54] To the mind of this Court, the Defendant has succeeded to demonstrate that the fundamental issue of establishing that the Defendant being bound by the Agreements have not been shown by the Plaintiffs. 23 [55] In the absence of any explanation from the Plaintiffs via an acceptable Affidavit in Reply, it must demonstrate the Plaintiffs’ mala fides or abuse of process in bringing the present claim against the Defendant. The failure of the Plaintiffs to rebut the regulatory documents such as the SSM searches were deafening. [56] This is where this Court agrees with the Defendant counsel that it is impossible for the Plaintiffs to argue against the SSM search results. The failure to rebut the factual averments means an acceptance of the contention contained in the Defendant’s affidavit. This based on settled principles of law. [57] The Plaintiffs however, had two (2) individuals, namely Tung Nok Karen and Leung Wai Hon affirm affidavits. Both individuals are from GET Financial Advisers Limited. GET Financial was appointed by the Defendant on or about 9.10.2017 to procure investors (including the Plaintiffs) for the Defendant. [58] According to affidavit evidence provided by the two (2) GET Financial individuals, the Defendant’s signatory in the Agreements – Zeng Yong – was already officially a director of the Defendant at the point of signing the Sale and Purchase Agreements. [59] This Court is persuaded by the argument of the Defendant that it is trite law that the Plaintiffs can, and must, only rely on their pleaded case, and any defect or omission in their Amended Statement of Claim cannot be made good by affidavit evidence. This was clearly stated in the oft-cited case of S&F International v Trans-Con 24 Engineering Sdn Bhd [1985] 1 MLJ 62 per Eusoffe Abdoolcader FCJ at page 66 as follows: “We would en passant observe that a Mareva application must necessarily in respect of the claim on which it is premised relate to the pleading of the plaintiff in the action instituted and even if it is sought to remedy by affidavit, it would make no difference as any defect or omission in a statement of claim cannot be made good by affidavit evidence…” [60] The Court of Appeal in Syarikat Rodziah v Malayan Banking Bhd [2021] 5 CLJ 170 set aside the High Court decision dismissing the defendant’s Order 18 rule 19 striking out application, and held, inter alia, as follows: “Once it is established that a party had adopted a particular stance in an action, it is estopped from changing that stance in another action and its admission in pleadings would amount to judicial admissions admissible against it.

The plaintiff's claim under appeal was scandalous, frivolous and/or vexatious and was, in fact, an attempt by the plaintiff to forum shop and issue switch. In such a scenario, due to the different and opposing stance taken by the plaintiff, the plaintiff should be estopped and the claim should be struck out and dismissed. The plaintiff's claim was also an abuse of process; it was an attempt by the plaintiff to salvage its position in relation to the monies due and owing under the facilities.” [61] Similarly, in the instant case, it is clear that the Plaintiffs’ original claim against the Defendant in the Amended Statement of Claim was ‘modified’ after receipt of the Defense, and ‘tweaked’ in the 25 Reply so as to try and salvage what is clearly a claim that is scandalous, frivolous, vexatious and an abuse of process. [62] The Plaintiffs have chosen not to sue the said three (3) individuals or Maslow. From the face of the pleadings which the Plaintiffs are bound by, it plainly obvious that the Plaintiffs have no reasonable cause of action against the Defendant. Even if the matter goes for trial, the fact is irreversible. Applying the findings to the legal principles of a striking out application [63] This Court is aware that a court should not strike out a case. It is cannot be gainsaid that under Order 18 rule 19, pleadings will only be struck out in plain and obvious. So long as the statement of claim discloses some ground of action, the mere fact that the plaintiff is unlikely to succeed at the trial is no ground for striking out. (See Mooney v. Peat Marwick & Mitchell [1967] 1 MLJ 87.) [64] However, this legal position must be balanced with the right of the defendant to strike the matter out when it has been demonstrated to the court that it is a plain and obvious case to do so. However, the provisions of Order 18 rule 19 must be applied where it is meritorious to do so. [65] This Court finds this case to fulfil the plain and obvious requirement principle expounded in Bandar Builder Sdn. Bhd. v United Malayan Banking Corporation Bhd [1993] 3 MLJ 36, and in 26 particular, the following part of the judgment of Mohamed Dzaiddin SCJ (later Chief Justice): “The principles upon which the Court acts in exercising its power under any of the four limbs of O. 18 r. 19 (1) Rules of the High Court are well settled. It is only in plain and obvious cases that recourse should be had to the summary process under this rule (per Lindley M.R. in Hubbuck v Wilkinson [1899] 1 QB 86, p. 91) and this summary procedure can only be adopted when it can be clearly seen that a claim or answer is on the face of it “obviously unsustainable” (Attorney-General of Duchy of Lancaster v. L. & N. W. Ry. Co [1892] 3 Ch. 274, CA). It cannot be exercised by a minute examination of the documents and facts of the case, in order to see whether the party has a cause of action or defence (Wenlock v Moloney [1965] 1 WLR 1238; [1965] 2 All ER 871, CA). The authorities further show that if there is a point of law which requires serious discussion, and objection should be taken on the pleadings and the point set down for argument under O. 33 r. 3 (which is in pari materia with our O. 33 r. 2 Rules of High Court) (Hubbuck v. Wilkinson) (supra). The Court must be satisfied that there is no reasonable cause of action or that the claims are frivolous or vexatious or that the defences raised are not arguable”. Is the action by the Plaintiffs scandalous, frivolous and vexatious? [66] In Harapan Permai Sdn Bhd v Sabah Forest Industries Sdn Bhd [2011] 1 CLJ 285, Low Hop Bing JCA defined scandalous as follows: “[17] In the context of O. 18 r. 19 (1) (b), the word “scandalous” means wholly unnecessary and irrelevant, and not just unpleasant allegations: Boey Oi Leng v. Trans Resources Corporation Sdn Bhd [2002] 1 CLJ 27 405 HC. A pleading is “frivolous or vexatious” when it is obviously unsustainable…” [67] It is the finding of this Court that the action by the Plaintiffs is scandalous and frivolous. Had the proper due diligence been carried out, the proper defendants would have been revealed. Is the action by the Plaintiffs an abuse of court’s process? [68] The circumstances where the process of the court could be abused are non-exhaustive. In Jasa Keramat Sdn Bhd & Anor v Monatech (M) Sdn Bhd [1999] 4 CLJ 533, Gopal Sri Ram JCA (as he then was) held that: “Since the circumstances in which the court's process may be abused are varied and numerous, the categories of such cases are therefore not closed. Whether the institution of an action or its continuation or a step taken therein amounts to an abuse of process depends upon particular and individual circumstances. Where an action is found to be an abuse of the court's process, it may be struck out or stayed. If it is too late to do this, the party aggrieved may bring an action based upon the tort of abuse of process.” (Emphasis added) See also Datuk Ooi Han Eng & Anor v Soh Huang Siah [2010] 1 LNS 343. [69] This Court finds the suit is an abuse of the court process in its current form. 28 Conclusion [70] Premised on the foregoing reasons, having considered the submission of the parties, this Court is of the firm view that the Plaintiffs’ claim is obviously unsustainable. The application in enclosure 29 is therefore allowed with costs. (AHMAD FAIRUZ BIN ZAINOL ABIDIN) Judge High Court of Malaya Kuala Lumpur Dated: 14th September 2021 29 Counsels: YJ Yap for Plaintiffs Messrs Yap Siew Yee & Co. (Petaling Jaya, Selangor) Trevor George De Silva + Yeow Tze Yi for Defendant Messrs Yeow Yap & Co. (Cheras, Selangor)