Tay Kuan Tea @ Tay Swee Seng v Phoon Yuh Jiun (WA-22NCC-761-10/2023)

This judgment concerns an application by the Defendant, Phoon Yuh Jiun, to strike out the claim of the Plaintiff, Tay Kuan Tea @ Tay Swee Seng, filed against her in this action. The Plaintiff and the Defendant are former directors and shareholders of two companies in which the Plaintiff claims to have made substantial financial investments. The Plaintiff alleges that due to the Defendant's mismanagement and breaches of duties in her capacity as a director of the Companies, the Plaintiff suffered losses which he now seeks to recover from the Defendant personally. The key issues to be determined in this application are whether the Plaintiff's claim is time-barred by limitation, whether the Plaintiff has the legal standing to bring this action in his personal capacity instead of in the name of the Companies, and whether the Plaintiff's claim discloses a reasonable cause of action or is otherwise frivolous, vexatious, and an abuse of the court process.

The Plaintiff and the Defendant were at all material times the Directors and shareholders of two companies, namely Beutech Sdn Bhd (“Beutech”) and Biosinga Sdn Bhd (“Biosinga”) (collectively referred to as “the Companies”).

Biosinga was established on 31.7.2009. The Plaintiff became a director of Biosinga on 30.12.2010, while the Defendant was appointed as a director on 21.7.2011. Prior to the Defendant's directorship, a person named Ling Tau Chuin was a director alongside the Plaintiff, and Tay Fung Soon worked as a director with the Plaintiff from 21.5.2010.

Beutech was established on 8.10.2009 (formerly known as Lagusto Sdn Bhd). The Plaintiff became a director of Beutech since 8.10.2009, while the Defendant became a director on 14.11.2012. During the same period, Roderick Wong Yew Hoong was a director of Beutech from 14.11.2012 to 1.9.2013, Chew Lih Lune was a director from 8.10.2009 to 21.1.2011, and Tay Fung Soon was a director from 21.1.2011 to 14.11.2012.

The Defendant submitted a resignation letter dated 5.2.2013, resigning as a director of both Biosinga and Beutech.

As of 31.10.2014, Beutech had accumulated losses of RM1,361,696.00 while Biosinga had accumulated losses of RM2,334,927.00, as per the Companies' 2014 financial statements. The Plaintiff and the Defendant each owned 1 share in the respective companies.

The Plaintiff's brother, Tay Kuan Choon, held the position of operations manager in the Companies.

On 7.2.2023, the Plaintiff issued a letter of demand to the Defendant for the sum of RM1,848,311.50, representing the Plaintiff's alleged losses in the Companies.

On 23.10.2023, the Plaintiff commenced a legal action against the Defendant in this action. The Plaintiff is claiming for the sum of RM1,848,311.50 from the Defendant as special damages for his alleged losses, along with other damages, interests and costs.

On 22.11.2023, the Defendant filed her Defence to the Plaintiff's claim.

On 4.12.2023, the Plaintiff filed his Reply to the Defendant's Defence.

On 20.12.2023, the Defendant filed an application to strike out the Plaintiff's Writ and Statement of Claim both dated 23.10.2024 pursuant to Order 18 rule 19(1) of the Rules of Court 2012 (“ROC 2012”) in Enclosure 7.

The Plaintiff’s pleaded case is as follows.

The Plaintiff and the Defendant were at all material times directors and shareholders of Beutech and Biosinga, the Companies.

The Defendant had full control over the business operations of the Companies, including their management, administration, finances, and cash flow.

At the Defendant's request and based on the Defendant's representations, the Plaintiff made financial investments in the Companies amounting to RM680,848.00 in Beutech and RM1,167,463.50 in Biosinga.

The Plaintiff invested in the Companies based on the Defendant's promises and representations, including: a) The Defendant would repay the Plaintiff's investment funds from time to time; b) The Defendant would use the funds solely for the Companies' business operations to generate profits for the shareholders; c) The Defendant would use the funds properly and in the best interest of the Companies; 5 d) The Defendant would carry out her duties as a director of the Companies in accordance with the law; and e) The Defendant would not misuse the Plaintiff's investment funds for purposes unrelated to the Companies' business.

The Defendant breached her representations, duties, and obligations by: a) Failing to repay the Plaintiff's investment funds; b) Using the Plaintiff's investment funds for purposes unrelated to the Companies' business; c) Misusing the funds for unauthorised and improper purposes; d) Breaching her statutory duties as a director in managing the Companies; and e) Failing to generate profits for the Plaintiff as a shareholder of the Companies.

As a result of the Defendant's breaches, the Plaintiff suffered losses amounting to RM1,848,311.50 (being the total of his investments in the Companies), as the invested funds had disappeared.

Despite the Plaintiff's demands, including a letter of demand dated 7.2.2023, the Defendant has failed, refused, and/or neglected to pay the Plaintiff's losses.

Based on the above, the Plaintiff is claiming the following relief against the Defendant: a) The sum of RM1,848,311.50 as special damages for the Plaintiff's losses; b) General damages, aggravated damages, and exemplary damages to be assessed by the court; c) Interest at the rate of 5% per annum on the judgment sum from the date of filing of the Writ of Summons until full settlement; d) Costs of the action; and e) Such further or other relief as the court deems fit and proper.

In essence, the Plaintiff's case is that the Defendant, in her capacity as a director of the Companies, had mismanaged the Companies and misused the Plaintiff's investment funds, thereby causing the Plaintiff to suffer financial losses. The Plaintiff is seeking to recover his alleged losses from the Defendant personally based on her breaches of duties, representations, and obligations owed to him.

The Defendant's submissions in opposition to the Plaintiff's claim and in support of the striking out application are founded on several key arguments. Primarily, the Defendant contends that the Plaintiff's action is time-barred under Section 6 of the Limitation Act 1953. The Defendant points out that the alleged losses occurred in 2014, as evidenced by the Companies' financial statements, yet the Plaintiff only initiated this action in 2023, well beyond the six-year limitation period. The Defendant refutes any suggestion of admitting liability or making promises to pay, which could have restarted the limitation period.

A central tenet of the Defendant's argument is that the amounts claimed by the Plaintiff do not represent personal investments but rather correspond to the accumulated losses of Beutech and Biosinga as of 31.10.2014. The Defendant emphasises that these figures are extracted directly from the 2014 financial statements of the Companies, challenging the Plaintiff's assertion of personal investment losses.

The Defendant strongly denies having control or management over the Companies' affairs. Instead, the Defendant argues that it was the Plaintiff who, as the main director and shareholder from the Companies' inception, 8 managed their affairs, finances, and administration. To support this, the Defendant points to company registration documents showing the Plaintiff's earlier appointment as director and the Plaintiff's statutory declarations in financial statements accepting responsibility for the Companies' finances and management.

Furthermore, the Defendant asserts that there is no evidence of the Plaintiff actually investing the claimed sums into the Companies. The Defendant argues that if such substantial investments had been made, there would be documentary evidence, especially given the Plaintiff's position as a director and shareholder with access to company records. The absence of such evidence, the Defendant contends, undermines the credibility of the Plaintiff's claims.

The Defendant also raises the issue of corporate personality, arguing that even if losses occurred, they would be company losses for which individual directors cannot be held personally liable. The Defendant contends that the proper course of action for company losses would be an action in the Companies' names, not a personal action by one director against another.

In conclusion, the Defendant submits that the Plaintiff's pleading discloses no reasonable cause of action, and the action is frivolous and vexatious and an abuse of the process of the court. The Defendant argues that the Plaintiff's claims are unsustainable in light of the available evidence, particularly the financial statements and company records that contradict the Plaintiff's narrative. As such, the Defendant urges the court to strike out the Plaintiff's action under Order 18 rule 19(1) ROC 2012

The Plaintiff's submissions centre on several key arguments to oppose the striking out of the action. Firstly, the Plaintiff contends that the action is not time-barred. This assertion is based on two main points: the Defendant's alleged admission of liability and promises of payment made from 2015 to 2020, with the last promise in 2020 effectively restarting the limitation period; and the characterisation of the invested money as “trust money,” which falls under Section 22 of the Limitation Act 1953 and is not subject to the standard 6-year limitation.

The Plaintiff also raised a procedural argument stating that the Defendant failed to plead the defence of limitation in her Defence as required by Section 4 of the Limitation Act 1953 and is precluded from striking out the Plaintiff’s action on the ground of limitation.

The Plaintiff further argues that he has the right to initiate personal action against the Defendant. This argument is premised on the claim that the investments were made by the Plaintiff personally in cash into the Companies based on 10 the Defendant's personal requests. The Plaintiff asserts that the Defendant fully managed the Companies, leading to losses, and that these company losses are effectively the Plaintiff's personal losses due to the Defendant's mismanagement.

In addressing the issue of reasonable cause of action, the Plaintiff points to the Defendant's alleged admission of liability as an indication of sustainable claims. Moreover, the Plaintiff contends that there are serious issues to be tried based on the parties' pleadings, which warrant a full trial rather than summary dismissal.

The Plaintiff strongly refutes any suggestion that the action is frivolous, vexatious, or an abuse of process. This stance is supported by the argument that the cause of action is within time based on the Defendant's alleged admission in 2020, and that there are substantive issues to be tried as evidenced by the pleadings.

Overall, the Plaintiff argues that striking out is not appropriate at this stage of the proceedings. The Plaintiff maintains that there are triable issues that require full ventilation of evidence at trial. Furthermore, the Plaintiff emphasises that the losses claimed relate to his personal investments made at the Defendant's request, not just company losses, thus justifying his personal action against the Defendant. This distinction, the Plaintiff argues, is 11 crucial in understanding the nature of the claim and its validity as a personal action against the Defendant.

The rules on striking out pleadings are provided in Order 18 rule 19(1) ROC 2012 which is reproduced below for convenience: “19. Striking out pleadings and endorsements (O. 18 r. 19)

The Court may at any stage of the proceedings order to be struck out or amended any pleading or the endorsement, of any writ in the action, or anything in any pleading or in the endorsement, on the ground that-

it discloses no reasonable cause of action or defence, as the case may be;

it is scandalous, frivolous or vexatious;

it may prejudice, embarrass or delay the fair trial of the action; or

it is otherwise an abuse of the process of the Court, and may order the action to be stayed or dismissed or judgment to be entered accordingly, as the case may be.” [36] The Federal Court in Tan Wei Hong (A Minor Suing Through Guardian Ad Litem And Next Friend Chuang Yin E) & Ors v Malaysia Airlines Bhd And Other Appeals [2018] 9 CLJ 425 has succinctly laid out the test for striking out pleadings, referring to the locus classicus Bandar Builders Sdn Bhd. v United Malayan Banking Corporation Bhd [1993] 4 CLJ 7. Ramly Ali FCJ delivering the judgment of the court, stated as follows: “The tests for striking out application under O. 18 r. 19 of the ROC, as adopted by the Supreme Court in Bandar Builders are, inter alia, as follows:

it is only in plain and obvious cases that recourse should be had to the summary process under the rule;

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;

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 a defence;

if there is a point of law which requires serious discussion, an objection should be taken on the pleadings and the point set down for argument under O. 33 r. 3 of the ROC; and

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.” [37] The Court of Appeal, in Sivarasa Rasiah & Ors v Che Hamzah Che Ismail & Ors [2012] 1 CLJ 75 adopted the well-settled principle of striking out in the following passage: “A striking out order should not be made summarily by the court if there is issue of law that requires lengthy argument and mature consideration. It should also not be made if there is issue of fact that is capable of resolution only after taking viva voce evidence during trial (see: Lai Yoke Ngan & Anor v Chin Teck Kwee & Anor [1997] 3 CLJ 305; [1997] 2 MLJ 565 (FC)).” Analysis and findings of the court Limitation [38] The Plaintiff submits that this action is not time-barred by limitation and ought not to be struck out on this ground for the following reasons. [39] First, the Defendant has no locus to proceed with the striking out application on this ground as the Defendant has failed to plead the defence of limitation in her Defence as required under Section 4 of the Limitation Act 1953. This alone warrants dismissal of the Defendant's application as decided in Tasja Sdn Bhd v Golden Approach Sdn Bhd [2011] MLJU 67. [40] Second, the Plaintiffs claim is not time-barred based on the following: a) From 2015 until 2020, the Defendant made admissions of liability and promises of payment to the Plaintiff regarding her obligations relating to the Plaintiffs investment in the Companies. Based on these admissions and promises, the last of which was in 2020, the Plaintiffs cause of action only accrued in 2020 and is thus not time-barred. b) The money given to the Defendant was “trust money” to be managed by the Defendant and returned with profit to the Plaintiff. The Plaintiffs claim against the Defendant is therefore based on trust principles and is not subject to the 6-year limitation period by virtue of Section 22 of the Limitation Act 1953 and the case of Robert Teo Keng Tuan v Chew Chong Eu [2015] MLJU 895. [41] The Defendant submits that the Plaintiffs claim is time-barred and ought to be struck out because the amount claimed by the Plaintiff, i.e. RM1,848,311.50, constitutes losses of the Companies as of 31.10.2014 based on the Companies' 2014 financial statements. Therefore, even if the losses were incurred in 2014, the Plaintiff only filed this action on 23.10.2023, which is more than 9 years after the losses were suffered. The Plaintiffs cause of action has thus exceeded the statutory limitation period. [42] Upon careful consideration of the parties' submissions and the material before me, I find in favour of the Plaintiff on this issue and hold that the Plaintiffs claim in this action cannot be struck out on the ground of being time-barred by limitation. My reasons are as follows. [43] It is trite law that a defendant seeking to raise limitation as a defence must expressly plead limitation in the defence. This is mandated by Section 4 of the Limitation Act 1953 which provides as follows: “Limitation not to operate as a bar unless specially pleaded

Nothing in this Act shall operate as a bar to an action unless this Act has been expressly pleaded as a defence thereto in any case where under any written law relating to civil procedure for the time being in force such a defence is required to be so pleaded.” [44] Section 4 is explicit and unambiguous in its requirement that limitation under the Limitation Act 1953 must be expressly pleaded as a defence before it can operate as a bar to an action. [45] The rationale behind this requirement is two-fold. First, it gives the plaintiff an opportunity to set out the grounds to justify any applicable exemption or exception from limitation. Secondly, it recognises that a limitation defence is not absolute and can be waived by the defendant. Unless it is expressly pleaded, the defendant may be taken to have elected to waive the defence. [46] This proposition of law was affirmed by the Federal Court in the case of Tasja Sdn Bhd v Golden Approach Sdn Bhd [2011] MLJU 67. In that case, the Federal Court held as follows: “[25] After scrutinizing the authorities above we agree with the submission of the plaintiff that in an application for striking out under Order 18 rule 19

RHC on the ground of limitation to bring an action, a distinction must be made as to which provision of the law is used to ground such application. If it is based on s 2 (a) of PAPA or s 7

of the Civil Law Act, where the period of limitation is absolute then in a clear and obvious case such application should be granted without having to plead such a defence. However, in a situation where limitation is not absolute, like in a case under the Limitation Act, such application for striking out should not be allowed until and unless limitation is pleaded as required under s 4 of the Limitation Act. ... [26] S 4 of the Limitation Act is explicit when it declares that “nothing in this Act shall operate as a bar to an action unless this Act has be expressly pleaded…”. This phase is clear and unambiguous. It demands the defendant to expressly state this as a defence before it can become effective.” [47] The Federal Court in Tasja drew a distinction between limitation provisions in other statutes like the Public Authorities Protection Act 1948 and Civil Law Act 1956 which are couched in absolute terms, and those in the Limitation Act 1953 which are not absolute and allow for exceptions. An application to strike out based on the former can be allowed even if limitation was not pleaded. However, where the Limitation Act 1953 is invoked, Section 4 must be complied with and limitation must be expressly pleaded before it can found a striking out application. [48] In the present case, one of the grounds of the Defendant's striking out application is the Plaintiff’s action is time-barred under the Limitation Act 1953. It is also not disputed that the Defendant had failed to plead limitation in her Defence dated 22.11.2023, prior to filing the striking out application. [49] As the Defendant failed to comply with the clear and unambiguous statutory requirement in Section 4 of the Limitation Act 1953, the Defendant cannot avail herself to limitation as a ground for this striking out application. This is compounded by the binding authority of the Federal Court's decision in Tasja which unequivocally requires limitation under the Limitation Act 1953 to be pleaded before a striking out application can be founded on it. [50] In light of the above reasons, the Defendant cannot rely on limitation as a ground in this striking out application. The condition precedent for invoking limitation under the Limitation Act 1953, i.e. expressly pleading limitation in the Defence, has not been fulfilled. Given the court’s firm finding on this point, it is not necessary for the court to consider the other points on admissions of liability “trust money”. Locus to bring the action [51] The Plaintiff contends that he has the right to initiate this personal claim against the Defendant for the losses suffered in his investment in Biosinga and Beutech, the Companies. The Plaintiff argues that he has made cash investments into the Companies at the Defendant's personal requests, and the Defendant was fully responsible for managing the Companies' businesses and affairs. The Plaintiff further submits that his losses were caused by the Defendant's personal negligence and failures, and the monies claimed are his personal monies and not the Companies' monies. [52] On the other hand, the Defendant argues that this action should have been brought using the Companies' locus standi and not by the Plaintiff personally. The Defendant contends that the monies claimed by the Plaintiff, i.e. RM1,848,311.50, are in fact the Companies' losses, as shown in the Companies' 2014 Financial Statements. Further, the Defendant as a director of the Companies owes duties to the Companies and not to the Plaintiff personally. The Plaintiff's allegations revolve around breach of the Defendant's duties as a director and losses suffered by the Companies. As such, the wrong was done to the Companies and not to the Plaintiff personally. Any losses sustained by the Plaintiff are merely reflective of or derivative from the Companies' losses. The Defendant submits that the Plaintiff should have taken a derivative action in the name of the Companies. [53] After carefully considering the arguments of both parties and the documents before me, I find that this action should have been properly instituted by the Companies Biosinga and Beutech or by the Plaintiff in a derivative action on behalf of the Companies, rather than by the Plaintiff in his personal capacity. [54] It is not disputed that the Plaintiff's claim of RM1,848,311.50 is exactly half of the figure that is stated as the Companies' accumulated losses in the 2014 Financial Statements for Beutech and Biosinga (Exhibit PYJ-3 in the Defendant's Affidavit in Support) i.e. RM3,696,623.00. The Plaintiff in his Statement of Claim pleads that he had invested a total sum of RM1,848,311.50 in the Companies, made up of RM680,848.00 in Beutech and RM1,167,463.50 in Biosinga. Crucially, this is the exact quantum that the Plaintiff is claiming in this action against the Defendant. However, a perusal of the 2014 Financial Statements of the two Companies exhibited in the Defendant's Affidavit (Exhibit PYJ-3) reveals that these two sums of RM680,848.00 and RM1,167,463.50 are precisely the amounts stated as each Company's respective accumulated losses as at 31.10.2014. [55] The Plaintiff's figures match the Companies' losses to the last sen. Given that there are only two issued shares in each Company, one held by the Plaintiff and the other by the Defendant, it is plainly apparent that the sum of RM1,848,311.50 claimed by the Plaintiff is arrived at by simply dividing the Companies' total losses of RM3,696,623.00 by two. Despite the Plaintiff's assertions that these are his personal investment losses, it is simply incredulous to suggest that the Plaintiff's alleged losses coincide exactly with the Companies' losses divided in half. There is no other reasonable explanation for this than the inescapable conclusion that the Plaintiff is in fact seeking to claim the Companies' losses as his own. [56] There may be a potential argument that this matter should proceed to trial to determine on the facts whether the claim is for the Companies' or the Plaintiff's losses. However, this argument must fail, as it is inherently unsustainable based on the Plaintiff's own pleadings and the documentary evidence. A comparison of the amount claimed by the Plaintiff against the Companies' losses as shown in their Financial Statements makes it manifestly clear that the Plaintiff is in fact seeking to recover the Companies' losses and not any distinct personal losses. [57] Any contention that this matter should be allowed to proceed to trial cannot be sustained given the striking exactness of the figures. No amount of evidence at trial can alter the conclusion that the Plaintiff is seeking to recover the Companies' losses as it arises from a plain reading of the Plaintiff's own pleadings and the documentary evidence. [58] Further, the Plaintiff's Statement of Claim itself is replete with allegations of breaches of duties and negligence by the Defendant in her capacity as a director of the Companies in managing their affairs. For example, in paragraph 7(iv) and

(vi), the Plaintiff pleads that the Defendant “had committed breach of representation to perform her duties as a Director of the Companies under the law and had breached her directors' duties under the law in running the Companies' businesses” and “had caused serious losses to the Companies”. These averments clearly frame the Defendant's wrongful conduct as misconduct qua director which caused losses to the Companies. [59] It is trite law that a director's duties are owed to the company. Any breach thereof that causes loss to the company is a wrong done to the company and not to its shareholders. The company is therefore the proper plaintiff to sue for such loss. The Federal Court in Dato' Shaharuddin bin Ibrahim v Dato' Ruslan bin Ali Omar & Ors [2020] MLJU 1744 held as follows: “[69] ... an action by the directors in breach of their fiduciary and statutory duties is a misconduct and a wrong done against the company and not the shareholders. The loss arising from such breach is a loss or injury suffered by the company and the loss to the shareholders are merely reflective of the loss of the company.” [60] In this case, the Plaintiff's reliance on the Court of Appeal decision in Lee Yee Wuen v Lee Kai Wuen & Ors [2020] MLJU 1902 does not assist his position that he can claim for the losses of RM1,848,311.50 in his personal capacity. In Lee Yee Wuen, the Court of Appeal held that in an oppression action under section 346 of the Companies Act 2016, the rule against reflective loss does not preclude a shareholder from seeking an order that monies misappropriated by the directors be repaid to the company, as part of the relief sought. Importantly, the court stressed that the restitutionary relief sought was for the monies to be repaid to the company, not to the shareholder personally. Lee Yee Wuen does not stand for the general proposition that a shareholder can personally sue a director for what are essentially the company's losses, outside the context of an oppression or derivative action. [61] In the present case, it is clear from the Plaintiff's pleadings and affidavits that the sum of RM1,848,311.50 which the Plaintiff is claiming as a personal loss, is in fact the accumulated losses of the Companies as stated in their 2014 Financial Statements. The Plaintiff's Statement of Claim and Affidavits do not disclose any loss that is separate and distinct from the Companies' losses pleaded. The Plaintiff himself acknowledges in his Affidavit in Reply that the losses in the Statement of Claim are those stated in the Companies' records and his alleged investment monies were paid into the Companies. The Plaintiff has failed to show that he has suffered any injury that is distinct from the Companies' losses or that the action could not have been brought in the Companies' names. The Plaintiff is not seeking an order for the monies to be repaid to the Companies but is instead claiming this sum as a personal loss. On this crucial fact, Lee Yee Wuen is plainly distinguishable and does not support the Plaintiff's attempt to claim what is in essence the Companies' losses as a personal claim. [62] The Plaintiff's reliance on the Court of Appeal case of Mak Siew Wei v Yeoh Eng Kong and other appeals [20201 1 MLJ 258 does not assist his position that he can maintain a personal action for the losses claimed in addition to a derivative action. In Mak Siew Wei, the Court of Appeal held that a shareholder's amendment to bring a personal action and a derivative action together in a single suit should not have been allowed. This was because it failed to recognise the fundamental difference between a personal action and a derivative action, and offended the rule against reflective loss which precludes a shareholder from claiming what is essentially the company's loss by bringing a personal action. The Court of Appeal clearly held that the loss claimed by a shareholder personally must be separate and distinct from the company's loss. On the facts of the present case, the Plaintiff's claim for RM1,848,311.50 is, on the face of the pleadings and the documentary evidence, the losses suffered by the Companies as stated in their 2014 Financial Statements. The Plaintiff has not shown any loss suffered by him personally which is distinct from the Companies' losses. As such, based on the principle enunciated in Mak Siew Wei, the Plaintiff's attempt to claim for what is essentially the Companies' losses under the guise of a personal action cannot be sustained. [63] In the circumstances, the inescapable conclusion is that the wrong, if any, was committed against the Companies and the Companies are therefore the proper plaintiffs. Following the decision of the Federal Court in Koh Jui Hiong @ Koa Jui Heong & Ors v Ki Tak Sang @ Kee Tak Sang and another appeal [2014] 3 MLJ 10, where the alleged wrong is done to a company, the proper plaintiff is the company itself. The exception is where a fraudulent and wrongful act is committed against a company by its directors who are in control, where a minority shareholder may bring a derivative action on behalf of the company. However, this is not the Plaintiff's pleaded case here. [64] Accordingly, for all the foregoing reasons, I find that the Plaintiff has wrongly instituted this action in his personal capacity in respect of what are, on the face of the pleadings and evidence, the Companies Biosinga and Beutech's losses. The claim should have been brought by those Companies or by way of a derivative action under Section 347 of the Companies Act 2016. There is no reasonable cause of action vested in the Plaintiff personally. Pleading material facts and adducing evidence [65] The Plaintiff submitted that it is not incumbent for the Plaintiff to show all the evidence to support his claim against the Defendant in this striking out application. The Plaintiff referred to the case of Pet Far Eastern (M) Sdn Bhd v Tay Young Huat & Ors [1999] 5 MLJ 558 where it was held inter alia that a case should only be struck out if it is obviously unsustainable, and the court should not undertake a detailed scrutiny of the documents and evidence at this early stage as it would go against the provisions of Order 18 rule 19(1) of the Rules of High Court 1980 (now Rules of Court 2012). The Plaintiff submitted that the court should look at the pleadings and affidavits to determine if the claim is obviously unsustainable, and it is not necessary for the Plaintiff to show all evidence at this stage. [66] The Defendant submitted that the Plaintiff's Statement of Claim fails to set out concise material facts and details of the claim as required under Order 18 rule 7(1) of the ROC

The Defendant referred to the cases of Sivakumar a/l Varatharaju Najdu v Ganesan a/l Retanam [2010] 7 MLJ 355 and Khor Chai Seang & Ors v Khor Teng Tong Holdings Sdn Bhd & Ors [2018] MLJU 483 to argue that if material facts are omitted, the statement of claim is bad and fails to provide particulars necessary to formulate a complete cause of action. The Defendant highlighted that despite the opportunity, the Plaintiff did not present any documents in his Affidavit in Reply to support his claim. [67] The Defendant further submitted that the Plaintiff's allegations are inconsistent with the contemporaneous documents, namely the audited Financial Statements for the year ended 31.10.2014 for the Companies, which were exhibited in the Defendant's Affidavit in Support. These statements show the amounts claimed by the Plaintiff, i.e. RM680,848.00 for Beutech and RM1,167,463.50 for Biosinga, are actually accumulated losses of the Companies as at 31.10.2014 and not the Plaintiff's alleged investment amounts. The Plaintiff failed to adduce any evidence like bank statements to prove his alleged investments despite being challenged to do so. The Defendant relied on Khor Chai Seang to argue that a claim is obviously unsustainable if the plaintiff's allegations are inconsistent with contemporaneous documents and material facts to support the contention are not pleaded. [68] Having considered the submissions of both parties and the materials before me, I am of the considered view that the Plaintiff's allegations are inconsistent with the contemporaneous documents and on this basis also, the Defendant's application to strike out the Plaintiff's claim should be allowed. [69] It is trite law that in an application to strike out, the court is only concerned with whether the pleaded case is sustainable in law. However, where there are patent inconsistencies between a party's pleaded case and the contemporaneous documents exhibited in affidavits, the court is entitled to consider such evidence in determining whether there is a sustainable cause of action. [70] In the present case, the Plaintiff pleaded in his Statement of Claim that upon the Defendant's request and representations, the Plaintiff invested RM680,848.00 in Beutech and RM1,167,463.50 in Biosinga. However, the audited Financial Statements of the two companies for the year ended 31.10.2014, exhibited in the Defendant's Affidavit in Support, clearly show that these amounts are actually the accumulated losses of the Companies as at that date, and not investment amounts by the Plaintiff as alleged. Each company's share capital is only RM2.00 divided into two ordinary shares of RM1.00 each held by the Plaintiff and Defendant respectively. [71] The Plaintiff's bare allegation that he invested the alleged sums in the Companies at the Defendant's request is inherently inconsistent with the audited accounts and appears wholly untenable. If indeed the Plaintiff had genuinely invested such substantial sums in the Companies as alleged, he would have been able to easily produce documentary evidence like bank-in slips, bank statements, receipts or acknowledgements from the Companies to prove the alleged investments when challenged by the Defendant. However, the Plaintiff failed to produce any such evidence in his Affidavit in Reply despite the opportunity to do so. [72] As held by the High Court in Soo Teck Lee & Ors v Lim Geok Kim & Ors [2022] 9 MLJ 41, prima facie evidence which can be produced ought to be produced in a striking out application, and bare allegations would not suffice. The court emphasised that bare denials or assertions do not constitute evidence and cannot give rise to triable issues. In Soo Teck Lee, the court struck out the plaintiffs' claim as frivolous, vexatious and an abuse of court process as they failed to provide sufficient evidence to support their allegations and contradict the defendant's documented evidence. [73] The principles in Soo Teck Lee apply squarely to the present case. Here, the Plaintiff has failed to provide any documentary evidence to support his bare allegations of investment and to refute the Defendant's contemporaneous evidence showing the claimed amounts are actually accumulated losses of the Companies. Following Soo Teck Lee, I find that the Plaintiff's claim is frivolous, vexatious and an abuse of court process. [74] Further, as held by the High Court in BA Urusbina (M) Sdn Bhd v Lembaga Kemajuan Johor Tenggera & Anor [2022] MLJU 1472, in a striking out application, a plaintiff must put forward all relevant material facts and evidence to satisfy the court that the claim is sustainable, not merely rely on bare assertions. The Plaintiff here has clearly failed to do so despite the opportunity afforded to him. As such, following BA Urusbina, I find that the Plaintiff's claim against the Defendant is obviously unsustainable based on the evidence before this court. [75] I agree with the Defendant's submission that the material facts pertaining to the Plaintiff's alleged investments and the Defendant's alleged request, representations and promises are within the Plaintiff's knowledge and should have been specifically pleaded with full particulars and relevant dates in the Statement of Claim to establish a reasonable cause of action. The Plaintiff's failure to do so, coupled with his failure to adduce any documentary evidence to support his bare allegations, leads me to the irresistible conclusion that the Plaintiff's claim is wholly unsubstantiated and obviously unsustainable. [76] I am mindful of the principle enunciated in Pet Far Eastern that the court should not undertake a minute examination of evidence in a striking out application and evidence is a matter for trial. However, as elucidated by the Federal Court in Bandar Builder Sdn Bhd v United Malayan Banking Corporation Berhad [1993] 3 MLJ 36, this principle is premised on the assumption that the pleading is otherwise in order. The following points can be observed from the Bandar Builder case: a) The court stated the well-settled principles that recourse to striking out under Order 18 rule 19 should only be had in “plain and obvious cases”, and the summary procedure can only be adopted when it can clearly be seen that a claim or answer is “on the face of it obviously unsustainable”. b) The court held that “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 a defence.” c) The court found that as long as the pleadings disclose some reasonable cause of action or defence, “the mere fact that the case is weak and not likely to succeed at the trial is no ground for the pleadings to be struck out.” d) In dismissing the appeals to strike out, the court said it was satisfied that “both pleadings have raised some issues which require serious discussion” and this was “not a plain and obvious case for striking out the pleadings as disclosing no reasonable cause of action and defence.” [77] Where there are patent inconsistencies between the pleaded case and the documents exhibited, and the claim appears fanciful and obviously unsustainable, the court is entitled to consider such evidence in deciding whether there is a reasonable cause of action. [78] The present case can be distinguished from Pet Far Eastern, which involved an allegation of fraud and the establishing of a constructive trust based on the defendant's knowledge, which understandably could not be particularised at the pleading stage without discovery and cross-examination. Here, the material facts and particulars supporting the Plaintiff's personal claim against the Defendant for alleged investment losses should already be available to the Plaintiff before commencing action. The details and documents required are not in the exclusive knowledge of the Defendant. The Plaintiff's failure to provide such details and evidence, despite challenge, fatally undermines his claim. [79] The Plaintiff in his submissions attempted to distinguish Sivakumar and Khor Chai Seang, relied on by the Plaintiff to argue that if material facts are omitted, the statement of claim is bad and fails to provide particulars necessary to formulate a complete cause of action, on the grounds that the former involved a case of assault while the latter involved the issue of res judicata, and thus the facts are distinguishable from the present case. [80] However, I find that the Plaintiff's attempt to distinguish the two authorities fails. The legal principles enunciated in Sivakumar and Khor Chai Seang regarding the requirement to plead material facts are applicable to the present case, notwithstanding the different factual matrices. [81] In Sivakumar, it was held that the plaintiff had not pleaded any material facts to support the contention that the persons who assaulted him were indeed the defendant's agents and/or servants. The court referred to Order 18 rule 7 of the Rules of High Court 1980 which states that every pleading must contain a statement in a summary form of the material facts, and if any one material fact is omitted, the statement of claim is bad. On this basis, the plaintiff's claim for damages against the defendant was held to be totally unfounded and obviously unsustainable. [82] Similarly, in Khor Chai Seang, the court struck out the plaintiff's statement of claim as it failed to provide a concise statement of material facts and contained particulars that violated the rules of pleading. The plaintiffs' contention of fraud, breach of trust and unjust enrichment by the defendants had no particulars pleaded. [83] The principles in these two cases regarding the requirement to plead material facts apply squarely to the present case. Here, the Plaintiff in his Statement of Claim merely made bare allegations regarding his alleged investments in the Companies at the Defendant's request, the Defendant's alleged misuse of funds and wrongful actions, without providing the necessary particulars and material facts to support such serious allegations. [84] In the circumstances, following the principles laid down in Soo Teck Lee, BA Urusbina, Sivakumar and Khor Chai Seang, I find that the Plaintiff's failure to provide such details and evidence, despite being challenged to do so, fatally undermines his claim. I agree with the Defendant's submission that the Plaintiff's inability to produce the particulars and relevant evidence to support his claim shows that the Plaintiff's claim against the Defendant is obviously unsustainable, as it lacks material facts regarding the Plaintiff's various allegations against the Defendant. The Plaintiff’s action is scandalous, vexatious and an abuse of process. [85] Plaintiff has failed to establish a reasonable cause of action against the Defendant. The Plaintiff's failure to provide the requisite details and evidence to substantiate his claim, despite being challenged to do so, renders his claim frivolous and vexatious and obviously unsustainable. Conclusion [86] Premised on the above, the Plaintiff's action is struck out pursuant to limbs (a), (b) and (d) of Order 18 rule 19(1) ROC 2012. The Plaintiff's pleading discloses no reasonable cause of action, is frivolous and vexatious and an abuse of the process of the court. The claim is in reality for the losses of Biosinga and Beutech which should have been brought by those companies or by way of a derivative action. Further, the Plaintiff has failed to plead the necessary material facts and adduce any evidence to support his personal claim despite the opportunity to do so. The clear inconsistencies between the Plaintiff's pleaded case and the documentary evidence render the claim patently untenable and fanciful. In the circumstances, the Plaintiff's action is struck out with costs of RM3,000.00. 24 July 2024 ATAN MUSTAFFA YUSSOF AHMAD Judge Kuala Lumpur High Court (Commercial Division) Counsel: For the Plaintiff: Mohd Saiful Hadi (Messrs Jehan & Co) For the Defendant: Chan Kang Wai with Jessie Teo (PDK) (Messrs Ng, Zainurul, Seke & Koo)