Tan Teng Hong v 1. ) Qualimedc Sdn Bhd (BA-24NCvC-125-01/2022)

1.

IVY WEE FONG FONG − DEFENDAN-DEFENDAN GROUNDS OF JUDGMENT Introduction [1] This is the Plaintiff’s application in Enclosure 1 vide an Originating Summons, in accordance with sections 347 and 348 of the Companies Act 2016 (Act 777) and Order 88 rule 2 and Order 92 rule 4 of Rules of Court 2012. [2] The Application is for the following orders:

Plaintif diberikan kebenaran untuk memfailkan, membawa dan meneruskan dengan prosiding dan/atau tindakan termasuk sebarang permohonan interlokutori dan rayuan dalam dan atas nama dan manfaat Defendan Pertama, Qualimedc Sdn Bhd (No. Syarikat:202001000257/1356576- 22/07/2022 14:43:10 BA-24NCvC-125-01/2022 Kand. 30 W) terhadap Anzen Iryo Sdn Bhd Syarikat:202001012147/1368467-W), Ivy Wee Fong Fong (No. K/P:891028-13-5372) dan Chan Wai Yee (No. K/P:850424-10-5094) menurut seksyen 347 dan 348 Akta Syarikat 2016.

Plaintif diberikan kebenaran untuk menentang dan/atau membela sebarang tindakan dan/atau permohonan interlokutori dan/atau rayuan terhadap Defendan Pertama atas nama dan manfaat Defendan Pertama.

Plaintif diberikan kebenaran untuk menguasai (“control”) prosiding dan/atau tindakan termasuk sebarang permohonan interlokutori dan rayuan tersebut di perenggan (a) dan/atau (b) di atas termasuk mengikrarkan sebarang afidavit atas nama dan manfaat Defendan Pertama terhadap Anzen Iryo Sdn Bhd (No. Syarikat:202001012147/1368467-W), Ivy Wee Fong Fong (No. K/P:891028-13-5372) dan Chan Wai Yee (No. K/P:850424-10-5094) termasuk melantik dan memberi arahan kepada peguam cara Defendan Pertama.

Defendan-Defendan dan/atau ejen, pengarah, wakil, juruaudit (“auditor”), juruakaun (“accountant”), pekerja dan/atau pegawai Defendan Pertama memberi segala kerjasama dan menyerahkan dokumen, dan segala informasi termasuk mengikrarkan sebarang afidavit, surat akaun dan/atau penyata saksi yang diperlukan untuk membolehkan Defendan Pertama memfailkan, membawa dan meneruskan dengan prosiding dan/atau tindakan yang dinamakan di perenggan (a) di atas.

sekiranya mana-mana pihak yang dinyatakan di perenggan Plaintif diberikan kuasa untuk memohon prosiding perlaksanaan terhadap mereka termasuklah prosiding komital.

Notis Pengindorsan di bawah Aturan 45 kaedah 7(4) Kaedah-Kaedah Mahkamah 2012 disertakan bersama-sama perintah ini.

Defendan Pertama akan dengan serta-merta (“forthwith”) menanggung dan membayar kepada Plaintif atas dasar tanggungrugi (“indemnity basis”) segala kos, perbelanjaan, cukai dan/atau fi peguam cara yang dikenakan dalam membawa dan/atau membela prosiding dan/atau tindakan yang dinyatakan di perenggan (a) dan (b) di atas.

Plaintif diberikan kebebasan untuk memohon relief dan/atau perintah selanjutnya (“libertu to apply”).

kos permohonan ini dan kos sampingan dibayar oleh Defendan Kedua kepada Plaintif.

apa-apa perintah dan/atau relif selanjutnya dan/atau yang lain yang Mahkamah ini anggap sesuai dan wajar. [3] The reasons for this application are that, briefly –

Plaintif adalah salah satu pengarah dalam Defendan Pertama dan adalah berhak dari segi undang-undang untuk memfailkan permohonan ini.

Plaintif mendapati bahawa Defendan Kedua selaku salah seorang dalam Defendan Pertama telah melanggari kewajipan berkanun dan kewajipan fidusiarinya kepada Defendan Pertama dengan menubuhkan sebuah syarikat bernama Anzen Iryo Sdn Bhd Syarikat: 202001012147/1368467-W) yang menjalankan perniagaan yang serupa dan mempunyai sifat yang sama dengan Defendan Pertama.

walaupun telah diminta semasa mesyuarat luar biasa tertangguh (“adjourned extra ordinary meeting”) yang berlangsung pada 30-8-2021, Defendan Kedua telah gagal menyerahkan dokumen berkenaan dengan Defendan Pertama dan stok Defendan Pertama yang diseleweng dan disimpan di gudang Defendan Kedua.

perlanggaran kewajipan berkanun dan fidusiari oleh Defenda Kedua selaku pengarah kepada Defendan Pertama telah memprejudiskan Defendan Pertama, mendatangkan kerugian kepada perniagaan Defendan Pertama dan akan menyebabkan kemungkinan Defendan Pertama akan dikenakan denda dan penalti oleh Suruhanjaya Syarikat Malaysia (SSM).

Plaintif telah mengisukan notis tempoh1 bulan kepada Defendan Kedua selaku pengarah Defendan Pertama sebelum memulakan tindakan ini menurut seksyen 347 Akta Syarikat 2016.

permohonan Plaintif ini adalah dalam niat baik (in good faith”) dan permohonan ini adalah demi kebaikan Defendan Pertama (“best interest of the First Defendant”). Alasan lain secara terperinci terkandung dalam afidavit sokongan Plaintif yang diikrarkan bersama-sama Saman Pemula ini. The Defendant’s contention on the Plaintiff’s Derivative Action Application [4] The Second Defendant pray that the Plaintiff’s Derivative Action Application be dismissed with costs. [5] The Plaintiff’s application is to seek leave from this Court to initiate an action on behalf of the First Defendant to claim the following from the Second Defendant, Chan Wai Yee and Anzen Iryo Sdn Bhd, namely –

menuntut kembali segala keuntungan rahsia yang diperoleh oleh Defendan Kedua, Anzen Iryo Sdn Bhd Syarikat:1368467-W) dan Chan Wai Yee dengan mengeksploitasikan senarai pelanggan dan pembekal Defendan Pertama, mengguna pakai stok Defendan Pertama tanpa apa-apa bayaran kepada Defendan Pertama dan apa-apa sumber (“resources”) Defendan Pertama.

menuntut ganti rugi terhadap Defendan Kedua, Anzen Iryo Sdn Bhd (No. Syarikat:1368467-W) dan Chai Wai Yee terhadap unsur-unsur frod dan/atau penipuan dan/atau subahat dan/atau komplot antara mereka untuk menrugikan Defendan Pertama.

menuntut ganti rugi terhadap Defendan Kedua atas kemungkiran kewajipan statutori, fidusiari dan/atau amanahnya dan/atau kontrak selaku pengarah kepada Defendan Pertama.

menuntut supaya Defendan Kedua dan Chan Wai Yee menyerahkan segala dokuman perniagaan dan perakaunan Defendan Pertama untuk penyediaan akaun, audit dan laporan kepada pihak berkuasa yang berkaitan. [6] The learned counsel for the Defendant cited the case of Celcom (M) Bhd v Mohd Shuaib Ishak [2011] 3 MLJ 636 in which the Court held that leave to bring a derivate action must not be given lightly but the Court must exercise greater caution in satisfying himself that all statutory requirements are met (not a low threshold of merely determining if there exist a prima facie case): “[8] It should be noted that the respondent had long ago ceased to be a member of the applicant (over six years). The intention of ss 181A–181E of the CA is to enable a member, present or past, to seek leave to bring an action in the name of the company to recover losses sustained by that company. As such, leave to bring a derivative action must not be given lightly (see Swansson v RA Pratt Properties Pty Ltd & Anor [2002] NSWSC 583). Thus, once leave is granted the defendants in this case cannot revisit the issue on the grant of leave. Granting leave is therefore final in that sense and not interlocutory in character. In this respect, the learned judge was wrong in stating cursorily that the matter before him was ‘only an application for leave’ and relying on the low threshold used under O 53 of the RHC (application for judicial review) ie to determine if an application for judicial review is not frivolous or vexations by relying on cases like Clear Water. The learned judge must as a matter of judicial prudence exercise a greater caution in satisfying himself that the requirements under s 181A of the CA are met. A low threshold of merely determining if there existed a prime facie case is therefore a wrong basis for granting the leave. There needs to be a strict interpretation of s 181A of the CA, and compliance to those statutory requirements (see Charlton v Baber (2003) 21 ACLC 1671).”. [7] According to the learned counsel for the Defendant, from the principles in the Celcom Case and Section 348(4) of Companies Act 2016 that in order for this Court to allow the Plaintiff’s Derivative Action Application, this Court shall impose a higher threshold but not to merely determining if there existed a prima facie case and the Plaintiff must strictly comply with the following two (2) main criteria:

S.348(4)(a) - That the Plaintiff is acting in good faith; and

S.348(4)(b) - That it appears prima facie to be in the best interest of the First Defendant that the application for leave be granted. [8] Further, the learned counsel for the Defendant submitted that the tests to be used are –

test of good faith under Section 181B(4)(a) of Companies Act 1965 (in pari materia with section 348(4)(a) of Companies Act 2016); and

test for interest under section 181B(4)(b) of Companies Act 1965 (in pari materia with section 348(4)(b) of Companies Act 2016). [9] The learned counsel for the Defendant submitted that the Plaintiff Derivative Action Application ought to be dismissed because –

the Plaintiff is not acting in good faith in filing the Plaintiff’s

there is no good cause of action and no reasonable prospect of success for the proposed Derivate Action;

the Plaintiff is seeking to bring the proposed Derivative Action for a collateral purpose as would amount to an abuse of court process;

the Plaintiff does not come with clean hands; and

it is not prima facie in the best interest of the First Defendant to pursue the proposed Derivate Action as there is no reasonable commercial sense to do so. The proper avenue is to wind up the company. The decision on 15-6-2022 [10] The decision is as follows: [1] Permohonan Plaintif via OS menurut peruntukan Companies Act 2016 (Act 777) − Section 347. Derivative proceedings

A complainant may, with the leave of the Court initiate, intervene in or defend a proceeding on behalf of the company.

Proceedings brought under this section shall be brought in the company’s name.

The right of any person to bring, intervene in, defend or discontinue any proceedings on behalf of a company at common law is abrogated. Section 348. Leave of Court

An application for leave of the Court under section 347 shall be made to the Court without the need for an appearance to be entered.

The complainant shall give thirty days’ notice in writing to the directors of his intention to apply for the leave of Court under section 347.

Where leave has been granted for an application under section 347, the complainant shall initiate proceedings in Court within thirty days from the grant of leave.

In deciding whether or not the leave shall be granted, the Court shall take into account whether—

the complainant is acting in good faith; and

it appears prima facie to be in the best interest of the company that the application for leave be granted.

Any proceedings brought, intervened in or defended under this section shall not be discontinued, compromised or settled except with the leave of the Court. [2] Selepas meneliti OS, afidavit, dokumen dan hujahan bertulis, Mahkamah ini mendapati Plaintif layak memperoleh kebenaran Mahkamah untuk memulakan prosiding atas nama dan manfaat syarikat iaitu Defendan Pertama. Pertikaian pihak-pihak tidak boleh ditutup (shut down) tanpa memberi peluang kepada Plaintif membuktikan tuntutannya dan Defendan perlu membela diri mengenai alegasi yang dinyatakan oleh Plaintif. Defendan juga dapat mempertahankan diri berkenaan dengan ganti rugi yang dituntut oleh Plaintif. [3] Dengan itu, Mahkamah memutuskan untuk membenarkan permohonan dalam Saman Pemula (Lampiran 1) (perintah seperti dipohon) dan dengan kos sebanyak RM7000.00 (tertakluk kepada fi alokatur).”. [11] The Second Defendant dissatisfied with the decision appeal to the Court of Appeal. [12] This judgment contains the reasons for my decision. Evaluation and Findings [13] The Plaintiff’s application is plainly for the leave of this Court made pursuant to section 347 Act 777 to begin a legal action for the First Defendant against the Second Defendant; Anzen Iryo Sdn Bhd (No. Syarikat: 202001012147/1368467-W, and Chan Wai Yee (No. K/P: 850424-10-5094). [14] In the affidavit in support, the Plaintiff had stated the following facts and averments:

Defendan Pertama adalah sebuah syarikat yang ditubuhkan di bawah Akta Syarikat 2016 dan mempunyai alamat berdaftar di No. 22, Jalan TP7/8, Section 22, 40400 Shah Alam, Selangor. (Sesalinan carian Suruhanjaya Syarikat Malaysia/SSM bagi Defendan Pertama dilampirkan dan ditandakan sebagai Ekshibit “TTH-1”).

Plaintif adalah salah seorang pengarah dalam Defendan Pertama manakala Defendan Kedua adalah pengarah dan pemegang 49 saham dalam Defendan Pertama.

sejak penubuhan Defendan Pertama pada 3-1-2020 sehingga 29-3-2021, Plaintif menguruskan pembekalan stok dan perakaunan Defendan Pertama manakala Defendan Kedua menguruskan kesemua urusan pentadbiran harian, pelangan dan perniagaan Defendan Pertama. Kemudian, pada 29-3- 2021, Defendan Kedua telah meminta supaya urusan perakaunan diserahkan kepadanya di mana dia akan dibantu oleh Chan Wai Yee (No. K/P: 850424-10-5094) yang juga dikenali sebagai “Wayne”.

sehingga kini, Defendan Kedua adalah orang yang mengawal dan menguruskan Defendan Pertama serta mengendalikan kesemua urusan pentadbiran harian, kewangan, kutipan jualan dan akaun Defendan Pertama.

pada setiap masa yang material, segala dokumen dan rekod Defendan Pertama adalah disediakan oleh dan/atau disediakan atas arahan Defendan Kedua dan dipegang dan/atau disimpan oleh Defendan Kedua dan/atau Wayne, kerani perakaunan Defendan Pertama, yang dilantik oleh Defendan Kedua.

Plaintif hanya bertanggungjawab untuk memeriksa dan meluluskan akaun tahunan Defendan Pertama, senarai stok (“stock listing”) Defendan Pertama dan berurusan dengan pembekal stok (“suppliers”) kepada Defendan Pertama.

pada sekitar April tahun 2021, Plaintif telah memohon supaya Wayne dan Defendan Kedua menyediakan penyata akaun tahunan Defendan Pertama untuk pemeriksaan dan kelulusan Plaintif tetapi mereka telah gagal memberi kerjasama dan kerap mencari alasan untuk menangguhkan penyediaan dan pembekalan akaun tersebut kepada Plaintif.

akhirnya, sehinggalah tempoh masa untuk penyerahan akaun tahunan Defendan Pertama kepada Lembaga Hasil Dalam Negeri/LHDN pada bulan Jun 2021 telah luput, Defendan Kedua masih gagal untuk menyediakan penyata akaun tahunan Defendan Pertama kepada Plaintif dan juga senarai stok Defendan Pertama.

oleh yang demikian, Plaintif mula mencurigai dan syaki ketelusan Defendan Pertama dalam menguruskan urusan dan operasi Defendan Pertama dan Plaintif telah mengambil inisiatif untuk memeriksa (“check and balance”) pengurusan Defendan Pertama dengan memohon kunci daripada Defendan Kedua untuk memeriksa simpanan stok Defendan Pertama dengan alasan untuk memesan dan menyediakan stok untuk jualan Defendan Pertama. Akan tetapi, Defendan Kedua telah sekali lagi enggan untuk memberi kerjasama kepada Plaintif.

pada 28-6-2021, dengan tanpa memaklumkan kepada Defendan Kedua, Plaintif telah pergi ke alamat perniagaan Defendan Pertama di No. 22, Jalan TP7/8, Section 22, 40400 Shah Alam, Selangor untuk memeriksa stok Defendan Pertama dan untuk mendapatkan maklumat mengenai akaun Defendan Pertama untuk memeriksa pengurusan Defendan Kedua.

apabila Plaintif tiba di alamat perniagaan Defendan Pertama, Plaintif telah mendapati bahawa kebanyakan stok Defendan Pertama telah hilang dan bahawa Wayne tidak berada di sana serta tidak terdapat apa-apa perabot pejabat di sana seolah-olahnya alamat perniagaan Defendan Pertama tersebut tidak pernah beroperasi langsung.

selepas itu, Plaintif telah menghubungi Defendan Kedua untuk mendapatkan penjelasan tetapi Defendan Kedua sekali lagi enggan untuk memberi apa-apa maklum balas kepada Plaintif dan tidak mengendahkan Plaintif.

Plaintif juga telah mendapati bahawa Defendan Kedua selaku Pengarah Defendan Pertama telah gagal menandatangani perjanjian penyewaan dengan tuan tanah atas nama Defendan Pertama walaupun Defendan Pertama telah membayar sewa bulanan bagi alamat perniagaan tersebut.

Plaintif kemudiannya mendapati bahawa Defendan Kedua bersama-sama Wayne telah menubuhkan sebuah syarikat yang dinamakan Anzen Iryo Sdn Bhd (No. Syarikat: 1368467- W) yang butiran syarikat ialah –

ditubuhkan pada 22-5-2020, iaitu empat (4) bulan selepas penubuhan Defendan Pertama;

(ii) menjalankan jenis perniagaan yang bersamaan dengan Defendan Pertama iaitu pemborongan barangan farmaseutikal dan perubatan ("wholesale of pharmaceutical and medical goods"); dan

(iii) mempunyai alamat perniagaan di No. 7, Jalan TP7/5, Sime UEP Industrial Park, 40400 Shah Alam, Selangor yang berdekatan dengan alamat perniagaan Defendan Pertama tersebut di No. 22, Jalan TP7/8, Section 22, 40400 Shah Alam, Selangor. (Sesalinan carian Suruhanjaya Syarikat Malaysia Anzen lryo Sdn Bhd (No. Syarikat: 1368467-W) dilampirkan dan ditandakan sebagai Ekshibit "TTH-2".)

pada 3-7-2021, Plaintif telah membuat laporan polis mengenai perkara-perkara di atas.

pada 30-8-2021, mesyuarat luar biasa tertangguh (“adjourned extraordinary general meeting”) Defendan Pertama telah diadakan melalui zoom dengan kehadiran Plaintif, Defendan Kedua, Puan Wong Siew Yong selaku pemegang saham, setiausaha syarikat, Encik Mohd Zakie bin Soad dan pembantu setiausaha syarikat, Puan Norazira binti Mohd Ali. Semasa mesyuarat tersebut, suatu keputusan telah terhasil di mana penyata akaun akhir tahun Defendan Pertama akan ditetapkan pada 30-6-2021 dan Defendan Kedua diminta untuk menyerahkan semua dokumen perakaunan Defendan Pertama, semua dokumen berkenaan Defendan Pertama dan baki stok yang disimpan di gudang Defendan Kedua pada atau sebelum hari Rabu, 3-9-2021 pada pukul 9 pagi untuk pemeriksaan Defendan Pertama. (Sesalinan Minit Mesyuarat Luar Biasa Tertangguh/Adjourned Extraordinary General Meeting”) bertarikh 30-8-2021 ditandakan dan dilampirkan sebagai Ekshibit “TTH-4”).

walaupun telah dimaklumkan dalam mesyuarat tersebut, Defendan Kedua telah gagal memberi kerjasama dan menyerahkan dokumen-dokumen yang dipohon dan baki stok yang disimpan di gudang Defendan Kedua walaupun dokumen-dokumen tersebut dan stok-stok tersebut adalah hakmilik Defendan Pertama. Defendan Kedua hanya sekadar pemegang amanah kepada Defendan Pertama. [15] The Plaintiff had gave the Second Defendant 3 months notice under subsection 348 (2) Act 777, for the Second Defendant to reply and give feedback pertaining to, namely that −

Defendan Kedua telah dengan tidak munasabah enggan meluluskan penyata akaun tahunan Defendan Pertama dan perlantikan juru audit untuk penelitian akaun Defendan

Defendan Kedua telah gagal untuk menyerahkan akaun perniagaan, segala rekod dan dokumen Defendan Pertama kepada juru audit untuk pemeriksaan;

dakwaan Defendan Kedua bahawa Defendan Kedua tiada akses kepada akaun, rekod dan dokumen Defendan Pertama adalah tidak benar dan tidak berasas; dan

Defendan Kedua telah menubuhkan syarikat Anzen lryo Sdn Bhd bersama dengan Wayne adalah untuk bersaing dengan Defendan Pertama, dan dengan itu telah memungkiri kewajipan fidusiarinya kepada Defendan Pertama. [16] On 10-11-2021, the counsel for the Second Defendant replied and stated that they opposed to the Plaintiff’s application made under section 347 Act 777. The Second Defendant had admitted that the Second Defendant had incorporated the company (Anzen lryo Sdn Bhd). [17] The Plaintiff stated that the First Defendant claims are for the following orders:

menuntut kembali segala keuntungan rahsia yang diperolehi oleh Defendan Kedua, Anzen Iryo Sdn Bhd dan Chan Wai Yee/Wayne dengan mengeksploitasikan senarai pelanggan dan pembekal Defendan Pertama, mengguna pakai stok Defendan Pertama tanpa apa-apa bayaran kepada Defendan Pertama dan apa-apa sumber (“resources”) Defendan Pertama.

menuntut ganti rugi terhadap Defendan Kedua, Anzen Iryo Sdn Bhd dan Chai Wai Yee/Wayne terhadap unsur-unsur frod dan/atau penipuan dan/atau suhabat dan/atau komplot antara mereka untuk merugikan Defendan Pertama.

menuntut ganti rugi terhadap Defendan Kedua atas kemungkiran kewajipan statutori, fidusiari dan/atau amanahnya dan/atau kontrak selaku pengarah kepada Defendan Pertama.

menuntut supaya Defendan Kedua dan Chan Wai Yee/Wayne menyerahkan segala dokumen perniagaan dan perakaunan Defendan Pertama untuk penyediaan akaun, audit dan laporan kepada pihak berkuasa yang berkaitan. [18] Based on the reasons, the Plaintiff seeks this Court to allow its application made for the benefits and best interests of the First Defendant. [19] The reasons for opposing the Plaintiff’s application, the Second Defendant based its arguments on the following:

the Plaintiff had misled this Court and there is no corroboration by any evidence for the Plaintiff to support this application. The learned counsel for the Second Defendant referred to the learned counsel for the Plaintiff’s written submission.

around the year of 2020, the Plaintiff and his wife (Wong Siew Yong) had agreed to form and incorporate the First Defendant.

the Plaintiff and his wife (Wong Siew Yong) have a company named Ace Glove and is in the business of selling gloves.

the incorporation of the First Defendant is based on the following terms:

that Ace Glove will supply funds to the First Defendant for the First Defendant to purchase stocks (medical products);

(ii) that the Second Defendant or IWS will purchase stocks from the First Defendant whenever there are orders made by IWS’s customers;

(iii) that the Plaintiff and Ace Glove will manage the First Defendant’s finance, the First Defendant’s accounts, day to day operation and supply of stocks;

(iv) that Second Defendant or IWS duty is just to purchase stocks from the First Defendant for IWS’s customer, i.e. making sales for the First Defendant through IWS; and

that the Second Defendant will be appointed as one of the directors of the First Defendant in which the Second Defendant is entitled to the following benefits of RM6,000.00 salary per month with Employee Provident Fund (EFP); 5% commission on sales that are contributed by IWS if the stocks that were sold were obtained in Malaysia; and 10% commission on sales that are contributed by IWS if the stocks that were sold were obtained from overseas.

based on the facts, the learned counsel for the Second Defendant submitted that, the main role of the Second Defendant in the First Defendant is to make sales for the First Defendant through IWS and to obtain salary (RM6,000.00) and commission (from sales) for such designated role. As such, the Second Defendant is not just acting as a “managing director” for the First Defendant. The role of the Second Defendant if at all there is any, is more tilted toward being a “sales director” of the First Defendant. [20] The learned counsel for the Second Defendant submitted that this Court should dismiss the Plaintiff’s application because – • both the Plaintiff and the Second Defendant who are the directors to the First Defendant owe fiduciary and statutory duty towards the First Defendant. It is wrong to say that it is only the Second Defendant who had breaced the fiduciary and statutory duty towards the First Defendant. • it was the Plaintiff who had breached the fiduciary and statutory duties owed to the First Defendant. The reasons are, −

the Plaintiff allege that the Second Defendant has failed to prepare and provide the First Defendant’s annual statement of account. The duty to prepare First Defendant’s Statement of Account was passed on from Plaintiff to the Second Defendant (and subsequently Wayne) around March 2021 because the Plaintiff’s own accountant could no longer handle First Defendant’s account.

(ii) when the duty of First Defendant’s account was passed on to the Second Defendant and Wayne, most of the documents (bank statements, invoices and cheques) were still in Plaintiff and his wife’s possessions. And as such, the Second Defendant and Wayne were facing difficulties in preparing First Defendant’s Statement of Account since there were many account issues. Albeit the difficulties, draft statement of accounts were prepared by Wayne and sent over to Plaintiff and Wong on 23.06.2021 with remarks that the draft is not finalised as certain documents were still in possessions of Plaintiff and his wife. On 30.06.2021, Plaintiff in his own initiative took unqualified stocks from the said Warehouse which heighten the difficulties for Wayne to prepare First Defendant’s Statement of Account. No further actions were done by the Plaintiff to rectify his own action, and as such First Defendant’s accounts are unable to be finalised, save and except for the draft accounts done by Wayne. Premised on the above, it is clear that the alleged breach of fiduciary duty in failure to prepare First Defendant’s Statement of Account was wholly caused or contributed by Plaintiff.

(iii) in regards to the said Warehouse, the Plaintiff alleged that the Second Defendant has breached its fiduciary duties that the Second Defendant failed and refused to let the Plaintiff enter into the said Warehouse; that there were missing stocks in the said Warehouse; that the Second Defendant deceived the First Defendant into paying rental for the said Warehouse; and that the Second Defendant failed to change the tenant of the said Warehouse from IWS to the First Defendant. These allegations were denied and the learned counsel for the Second Defendant submitted that –

the said Warehouse was rented by IWS since year 2019 prior to the incorporation of the First Defendant; and since IWS is already the tenant for the said Warehouse, the Second Defendant as the sole proprietor of IWS has allowed the First Defendant’s stock to be stored in the said Warehouse. As a result of this arrangement, stocks for the First Defendant and IWS were both stored in the said Warehouse; and this arrangement was never disputed by the Plaintiff.

the dispute towards this arrangement was only raised for the first time on 30.08.2021 at the First Defendant’s EGM after relationship between Plaintiff, his wife and the Second Defendant turned sour.

the Plaintiff had the knowledge that the said Warehouse were filled with mixture of the First Defendant’s and IWS’s stocks. However, on 28.06.2021, without informing the Second Defendant, the Plaintiff went into the said Warehouse and took away the stocks in the said Warehouse without quantifying the same. On 29.06.2021, the Second Defendant found out that certain stocks from the said Warehouse went missing, and made a police report on the same day. [21] Premised on the above, the learned counsel for the Second Defendant submitted that the Plaintiff’s Submissions are misleading in an attempt to hide the true fact that it was the Plaintiff who has breached his fiduciary duties. [22] The learned counsel for the Second Defendant also submitted that the Plaintiff’s application and the issues raised in its application are with the sole intention in furthering a dispute or to create controversy or to disrupt the Second Defendant’s management. [23] The learned counsel for the Second Defendant submitted that urged this Court to alert on the issue of EGM’s minutes of Meeting. This court must take caution in considering the content of EGM’s minutes of Meeting. The learned counsel for the Second Defendant stated that as the Second Defendant is the minority shareholder, she was oppressed by the Plaintiff and his wife as being the majority shareholder, directors & owner of Ace Glove. The Second Defendant has no say in the said EGM. [24] The learned counsel for the Second Defendant explained about the incorporation of Anzen Iryo Sdn Bhd, that – • the Second Defendant admitted that Anzen Iryo Sdn Bhd was incorporated by the Second Defendant and Wayne. • Anzen Iryo Sdn Bhd was non-operational at all material times. • IWS which is the only, if not, major customer of the First Defendant still brought in substantial sale/business to the First Defendant at all material times despite the incorporation of Anzen Iryo Sdn Bhd. • the Plaintiff does not have a single piece of document to prove that there was any profit or secret profit made by Anzen Iryo Sdn Bhd or that Anzen Iryo Sdn Bhd had exploited the First Defendant’s customers list or that Anzen Iryo Sdn Bhd has taken the First Defendant’s stocks. • all the allegations made by the Plaintiff against Anzen Iryo Sdn Bhd were merely conjectures, assumption and speculation, and in essence bare assertions without evidences. • there are documents exhibited by the Second Defendant’s affidavit in reply to show that it was the Plaintiff who secretly transferred sum in the total amount of RM2,877,000.00 from the First Defendant’s accounts to Ace Glove’s account, the said sum equivalent to 93% of the total revenue of the First Defendant. [25] On the face of evidences, the learned counsel for the Defendant submitted that it goes to show that it was the Plaintiff who – • has breached his fiduciaries duty as the First Defendant’s director. • put his own interest (as director of Ace Gloves) above the interest of the First Defendant. • put himself in a conflict of interest. [26] Finally, the learned counsel for the Defendant submitted that the Plaintiff has failed to satisfy the requirement under S.348(4) of Act 777, that are –

the Plaintiff was acting in good faith in filing this application.

it is not for the best interests of the First Defendant. [27] Furthermore, the learned counsel for the Defendant submitted that this action is designed with underlying purpose of furthering a dispute or to create controversy or to disrupt an opposing party’s management of the company or to oppress/suppress the minority shareholder or to seek vengeance due to reasons aforesaid and also the fact that the Plaintiff was put behind bars for few days as the Second Defendant lodged police report when found out that stocks have gone missing. The law is now clear that leave shall only be granted by exercising a greater caution but not merely determining if there existed a prima facie case. [28] Furthermore, in order to determine the action is taken in good faith, the applicant has to prove on a balance of probabilities that “the applicant honestly believes that a good cause of action exists and has a reasonable prospect of success and whether the applicant is seeking to bring the derivative suit for such a collateral purpose as would amount to an abuse of process.”. Therefore, leave ought not to be granted. [29] After considering both version of facts by the Plaintiff and the Second Defendant; the affidavits and the written submission by the learned counsels, I allowed the Plaintiff’s application. [30] In a derivative action, the Plaintiff is the director of the First Defendant. As claimed by the Plaintiff with the facts disclosed clearly to this Court, the allegationgs of wrong doing was committed against the First Defendant. As the First Defendant is the victim, it has to be made a party to the action. [31] The Plaintiff has qualified and fulfilled the requirement to bring this derivative action. The First Defendant need to be named as a party to the action, the court can order damages to be paid by the wrongdoers to the First Defendant. [32] From the facts laid down by both the Plaintiff and the Second Defendant, this Court has evaluated and it is clear that the Second Defendant is in control of the First Defendant and thus have prevented the First Defendant from taking action. [33] The Plaintiff’s application is rightly applied under section 347 of the Act 777 as this section provides that the Plaintiff as the complainant may, with the leave of the court, commence, intervene or defend an action on behalf of the First Defendant. [34] The incorporation of Anzen Iryo Sdn Bhd by the Second Defendant was said to be in competing with the First Defendant and the Second Defendant was alleged has breached her fiduciary duty to the First Defendant are the reasons for the Plaintiff to bring the derivative action and not action to wind-up the First Defendant. [35] The Plaintiff in its affidavits and supported by the documents had showed to this Court that the Plaintiff comes in clean hands, in good faith and for the best interest of the First Defendant. The Plaintiff sessk for leave. The Court after taking great caution had allowed this application. Conclusion [36] In view of the foregoing, it is my judgment that having evaluated the evidence, I find that the leave is correctly granted to the Plaintiff and this decision is in accordance with the Act 777. [37] The Application is not only for the benefit of the Plaintiff but also for the Second Defendant. The Second Defendant, Wayne and Anzen Iryo Sdn Bhd can defend and protect themselves should there is a legal action against them. Dated: 22 July 2022. RoziBainon ( ROZI BINTI BAINON ) Judicial Commissioner High Court NCvC12 Shah Alam Counsels: For the Plaintiff (Respondent): Andrew Tan Meng Kuan Tetuan Alan Tan & Associates Batu Pahat, Johor For the Second Defendant (Appellant): Teo Wei Ping Tetuan Wayne Ng, Yong & Lim, Petaling Jaya, Selangor