Toralf Mueller v ALCIM Holding Sdn Bhd & 3 Lg (26NCC-71-04/2012)

ALCIM HOLDING SDN BHD (Company No.: 655881-K)

ALCIM SDN BHD (Company No.: 746474-V)

JACOB A/L GEORGE (NRIC No.: 630624-10-6441)

ROZILAH BINTI MAT TAHIR (NRIC No.: 730116-14-5776) … RESPONDENTS 2

There are 2 appeals before me. In a proceeding filed pursuant to section 181 of the Companies Act 1965, the Learned JC Datuk Wong Kian Kheong (as he then was) had ordered compensatory damages to be assessed and paid jointly and severally by the 3rd and 4th Respondents to the Petitioner. The damages were assessed by the Deputy Registrar who awarded the sum of RM193,025.70 in favour of the Petitioner. The Petitioner has appealed against her decision. The 3rd and 4th Respondents also appealed. I have allowed the appeal of the Petitioner partially and also partially allowed the appeal of the 3rd and 4th Respondent. These are the full reasons for my decision.

The Petitioner is the 50% de facto owner/ultimate shareholder of the 1st and 2nd Respondents who are nominal defendants in the section 181 action.

The Petitioner was a director of the 1st Respondent until 29.11.2011. 3

Until 3.2.2012, the Petitioner was a director of the 2nd Respondent.

The Petitioner was the 2nd Respondent’s Chief Executive Office (CEO) until his removal on 14.10.2011.

The 3rd and 4th Respondents are the directors of the 1st and 2nd Respondents.

In 2011, the 3rd and 4th Respondents caused the 1st and 2nd Respondents to file a suit No. 22NCC-1688-10/2011 in the Kuala Lumpur High Court against the Petitioner and other parties alleging inter alia that the Petitioner had breached his fiduciary duties to the 1st and 2nd Respondents and had conspired with the other defendants to injure and cause loss to the 1st and 2nd Respondents. (“the Conspiracy Suit”).

In the Conspiracy Suit, the Petitioner filed a Counterclaim against the 1st and 2nd Respondents and the 3rd and 4th Respondents. In his counterclaim, the Petitioner claimed inter alia for an order that the 3rd and 4th Respondents account for all monies dissipated, benefits and advantage received from the 1st and 2nd Respondents to be assessed and that the 2nd Respondent pay to the Petitioner the sum of 4 RM1,304,875.00 for the unlawful termination and/or sacking of the Petitioner as its CEO.

While the Conspiracy Suit was on-going before YA Datuk Hasnah Binti Dato Mohammed Hashim (“YA Datuk Hasnah”), on 25.4.2012, the Petitioner filed the section 181 petition against the Respondents. The Petition was premised on 10 grievances against the 3rd and 4th Respondents.

After going through a lengthy trial, YA Datuk Hasnah on 31.10.2014 dismissed the Conspiracy Suit and allowed the Petitioner’s counterclaim.

The section 181 Petition was heard before YA Datuk Wong who found in favour of the Petitioner on the following grievances:

3rd grievance. YA Datuk Wong agreed with the Petitioner that the 3rd and 4th Respondents had ousted the Petitioner from the management of the 2nd Respondent when they took control of the meeting held on 15.8.2011 and held that that was in breach of their Mutual Agreement. 5

4th grievance. YA Datuk Wong JC agreed with the Petitioner that the appointment of additional directors in the 1st and 2nd Respondents was in breach of the 3rd Respondent’s duties as quasi-partner and the 4th Respondent’s duties as a Trustee.

5th grievance. YA Datuk Wong agreed with the Petitioner that the removal of the Petitioner as CEO of the 2nd Respondent and director of both the 1st and 2nd Respondents was a breach of the 3rd Respondent’s duties as quasi-partner and the 4th Respondent’s duties as a Trustee.

6th grievance. YA Datuk Wong agreed with the Petitioner that the removal of the Petitioner as a cheque signatory was a breach of the 3rd Respondent’s duties as quasi-partner and the 4th Respondent’s duties as a Trustee and

9th grievance. YA Datuk Wong agreed with the Petitioner that the dilution of the Petitioner’s shares in the 1st Respondent was commercially unfair to and oppressive of the Petitioner.

YA Datuk Wong found that the other grievances were not commercially unfair to the Petitioner in his capacity as shareholder of the 1st and 2nd Respondents within the meaning of section 181 of the Petition. 6

On 26.5.2016, YA Datuk Wong JC ordered the winding up of the 1st and 2nd Respondents and ordered assessment of damages to be paid by the 3rd and 4th Respondents to the Petitioner.

The Respondents filed appeals against the decisions of the respective judges in the Conspiracy Suit and the section 181 Petition.

On 8.9.2016, the Court of Appeal dismissed the Respondents’ appeals but allowed the Respondents’ appeal against the Petitioner’s Counterclaim in the Conspiracy Suit.

The Court of Appeal also held that res judicata and estoppel applied in this case and that YA Datuk Wong was bound by the findings of fact by YA Datuk Hasnah in the Conspiracy Suit.

The Petitioner has filed for assessment of damages against the 3rd and 4th Respondents and this was heard before the Deputy Registrar.

The Petitioner claimed damages in the total sum of RM8,181,281.32 as follows: 7 No Particulars Total Amount Total Claim %

Value of the Petitioner’s 50% shares in the 1st and the 2nd Respondents. Indicative value of ALCIM Group based on the consolidated financial statement as at Financial Year End 2011 (see UHY Report dated 14.12.2016) 7,909,805.00 3,954,903.00 50%

Compensatory damages for equal payment made/paid to the 3rd Respondent from Oct 2011 to July 2015.

Salary paid to Jacob as Chairman (ALCIM Sdn Bhd) – RM460,000.00

EPF paid to Jacob (ALCIM Sdn Bhd) – RM67,100.00.

Directors Fee paid to Jacob (ALCIM Holding) – RM25,000.00 per month (RM15,000.00 paid directly to Jacob and RM10,000.00 paid to Jacob’s wife and son) – RM1,141,490.00.

EPF paid to Jacob directly and/or to his wife and son (ALCIM Holding) – RM196,150.00. 1,864,740.00 1,864,740.00 100% 3 Compensatory damages for equal payment made/paid to the 3rd Respondent directly to through his wife. 415,615.02 415,615.02 100% 8 No Particulars Total Amount Total Claim %

Compensatory damages for all payment paid to and/or expenses incurred in the illegal/unlawful appointment of additional directors:

ALCIM Holding Sdn Bhd – RM85,000.00.

ALCIM Sdn Bhd – RM108,025.70. 193,025.70 193,025.70 100%

Compensatory damages for wasted and/or unnecessary and/or unjustified legal and counsel fees paid to Messrs Bodipalar Ponnudurai De Silva.

Payment from Standard Chartered Bank – RM2,897,616.21.

Payment from CIMB Bank – RM493,840.00. 3,391,456.21 1,695,728.10 50%

Compensatory damages for wasted, rejected and/or unnecessary and/or unjustified reports in KLHC Suit No.

Baker Tilly Monteiro – RM37,936.00;

Crowe Horwath – RM21,417.00;

JR Control Risk – RM48,686.00; and

Siaga Informatics – RM6,500.00. 114,539.00 57,269.50 50% TOTAL CLAIM RM8,181,281.32 9

It is trite law that even though an award of damages has been made in favour of the Petitioner, he still has the burden of proving that he has suffered the losses and damages claimed as a consequence of the proven grievances.

In the case of Popular Industries Limited v Eastern Garment Manufacturing Sdn Bhd [1989] 3 MLJ 360 it was held as follows: “It is axiomatic that a plaintiff seeking substantial damages has the burden of proving both the fact and the amount of damages before he can recover. If he proves neither, the action will fail or he may be awarded only nominal damages upon proof of the contravention of a right. Thus nominal damages may be awarded in all cases of breach of contract. (see Marzetti v William). And where damage is shown but its amount is not proved sufficiently or at all, the court will usually decree nominal damages… … In this context, I am reminded of Lord Goddard’s dictum in Bonham-Carter v Hyde Park Hotel quoted with approval by Thomson CJ in Lee Sau Kong v Leow Cheng Chiang, namely, that : 10 Plaintiffs must understand that if they bring actions for damages it is for them to prove their damage; it Is not enough to write down the particulars and, so to speak, throw them at the head of the court, saying “ This is what I have lost, I ask you to give me these damages.” They have to prove it.”

1st Head of Damages: Value of the Petitioner’s 50% shares in the 1st and 2nd Respondents (hereinafter the 1st and 2nd Respondents will be referred to as “the Companies”).

In support of this head of damage, the Petitioner produced a valuation report by UHY FLVS Sdn Bhd which estimated the value of the Companies at the sum of RM 7,909,805.00 as at December 2011. A very substantial portion of that sum comprises cash in bank. The Petitioner claims 50% of that sum, being RM3,954,903.00.

The valuation methodology used by the valuer was the Asset Based Method.

The 3rd and 4th Respondents have criticised the findings in the valuation report and pointed out various factors which have not been taken into account by the valuer. 11

It is the Petitioner’s case that as a result primarily of the dilution of his shareholding in the Companies, the value of his shares has become zero at the date of winding up of the Companies. However, there is no valuation report to prove what the value of the shares was at the date of winding up of the Companies. More importantly, there is nothing to show that the value of the Petitioner’s shares had been reduced as a result of the dilution of his shareholding. In other words, the Petitioner has not proved that the dilution of his shares in the Companies had resulted in a reduction in the value of his shareholding. The Petitioner has also not proved that his shares have become worthless as a result of the grievances proved by him. If, as alleged by the Petitioner, the 1st Respondent is a holding company with no business whilst the 2nd Respondent had no creditors, and if it is true that at the time of winding up the 1st and 2nd Respondent’s Net Assets were down to only RM 896,772.47 and (-) RM 1,621,664.62, there must have been cash depleted by the directors but, as will be elaborated later on, Datuk YA Wong found that dissipation of the company’s monies does not constitute oppressive conduct against the shareholder. On this basis, I find that the Petitioner has not proved this head of damage. In other words, the valuation report adduced by the Petitioner does not prove that the shares of the Petitioner have become worthless as a result of 12 the proved grievances in particular, the dilution of the shareholding of the Petitioner. As such I do not find it necessary to consider the submissions of the 3rd and 4th Respondents as to why the valuation report cannot be relied upon.

I also bear in mind that by claiming the value of his shares as at December 2011, the Petitioner is effectively seeking the 3rd and 4th Respondents to purchase his shares at the value as at December 2011. YA Datuk Wong had expressly declined to order a share purchase order in the Section 181 Petition. He said this : “V1. “Buy-out” is not appropriate

After considering the Parties’ Submission On Remedy, I am unable to accede to the Petitioner’s 1st Prayer under s 181(2) (c) CA for the following reasons:

The Companies are dormant with no source of income. Any “buy-out” of the shares in the Companies will not be meaningful;

The Companies are not listed on Bursa Malaysia whereby it will be easy to ascertain the price of the Companies’ shares at any point of time. Accordingly, there are serious problems in ascertaining the value 13 of the Companies’ shares for the purpose of the proposed “buy-out” order as follows –

which date should be used to value the share of the Companies? I cannot accept 30.6.2011 as the date to value the Companies’ shares because the first commercial unfairness (3rd Grievance) occurred at the 2nd Respondent’s BOD meeting dated 15.8.2011; and

(ii) which competent and independent valuer should be appointed for the purpose of the proposed ‘buy-out’ order? The parties in this case cannot agree on the appointment of the valuer.”

To order the 3rd and 4th Respondents to buy out the Petitioner would be to grant the Petitioner the order which YA Datuk Wong had expressly declined to give.

2nd Head of Damage: Compensatory damages for equal payments made/ paid to the 3rd Respondent from October 2011 to July 2015.

Flowing from the findings of YA Datuk Wong in the 3rd Grievance, the Petitioner submits, as he was an equal partner with 50:50 shareholding, he is entitled to claim for the following amount: 14

Had it not been for the oppressive conduct of the 3rd and the 4th Respondents in removing him from the Companies, the Petitioner claims that he would have been entitled to the above amount.

I find that the Petitioner has not proved that he would have been entitled to the sum of money paid to the 3rd Respondent as director if he had not been removed as director of the Companies. The 3rd and 4th Respondents submit and this is not disputed by the Petitioner that the Petitioner has never been paid director’s fee. Instead the agreement was that the Petitioner would be paid as the CEO of the 2nd Respondent whereas the 3rd Respondent would receive director’s fees.

Salary paid to the 3rd Respondent as Chairman of ALCIM Sdn Bhd RM460,000.00

EPF contribution paid to the 3rd Respondent RM67,100.00

Director’s Fee RM25,000.00 per month (RM15,000.00 was paid to the 3rd Respondent and RM10,000.00 was paid to the 3rd Respondent’s wife and son) RM1,141,490.00 EPF contribution paid to the 3rd Respondent and/or the 3rd Respondent’s wife and son RM196,150.00 15

However, YA Datuk Wong held that the appointment of the 3rd Respondent as the 2nd Respondent’s executive Chairman was contrary to the Mutual Agreement for the Petitioner to run the 2nd Respondent. Therefore, the 3rd Respondent should not have been entitled to be paid the salary and EPF of RM460,000.00 and RM67,100.00 respectively as executive Chairman. That is a wrong done to the Petitioner and not to the 2nd Respondent so the Petitioner should be entitled to claim his 50% portion of that amount, in the sum of RM263,550.

I agree that if the Petitioner had never been paid directors’ fee, he has not suffered any monetary loss in terms of directors’ fee as a consequence of his removal as a director of the Companies. What the Petitioner suffered was the loss of his salary as the CEO of the 2nd Respondent but the Petitioner is not claiming for that because he has already been awarded compensation in his Industrial court case against the 2nd Respondent where he had obtained an order for damages against the 2nd Respondent. Since the 2nd Respondent has been wound up, it stands to reason to assume that the Petitioner would not be paid pursuant to the Industrial court award. I would have been willing to order the 3rd and 4th Respondents to pay that amount awarded to the Petitioner. In his Grounds of Judgment, YA Datuk Wong has said this: 16 “[157] I do not accept the Respondents’ contention that since the Petitioner has been awarded damages in the Conspiracy Suit and compensation in the Industrial Court (2 Earlier Compensatory Orders), the Petitioner will be unjustly enriched by another claim of compensatory damages (assessed in the inquiry). This is because the 2 Earlier Compensatory Orders are payable by the 2nd Respondent and not by the 3rd and 4th Respondents personally. As admitted by the Respondents’ learned counsel, the Companies are merely “shell” companies and most likely, the 2 Earlier Compensatory Orders may just constitute paper judgments. Accordingly, I do not foresee the Petitioner being unjustly enriched by compensatory damages assessed in the inquiry.”

However, the Petitioner has not adduced any evidence as to what he would have lost as a result of the termination of his employment as CEO of the 2nd Respondent. There is a figure mentioned in his Counterclaim in the Conspiracy Suit but in the absence of any evidence to support the loss suffered by him as a result of his termination as CEO of the 2nd Respondent, I am unable to award him anything on this item.

Therefore, in respect of this head of damage, I find that the Petitioner is entitled to a sum of RM263,550.00 only. 17 3rd Head Of Damage: Compensatory Damages For Equal Payments Made/Paid To The 3rd Respondent Directly Or Through His Wife And Son.

The Petitioner contends that the 3rd Respondent had withdrawn all monies totalling to RM415,615.02 from the 1st Respondent’s CIMB Bank Rawang Branch account and paid them to himself and his wife as ‘back-dated remuneration’.

According to the Petitioner, these payments were based on the recommendations of Crowe Howarth’s Forensic Audit Report dated 27.11.2012 (“Crowe Howarth’s Report”). The Crowe Howarth’s Report was referred to in the Conspiracy Suit. However, it was rejected by the learned YA Datuk Hasnah.

The Petitioner contends that there is no basis for such payment as it had been established that the 3rd Respondent’s wife is not an employee of the 1st Respondent and that the 1st Respondent is only a holding company with no business running. 18

Therefore, the Petitioner claims that the same amount ought to be paid to him being a 50% shareholder of ALCIM Group if not for the removal of the Petitioner as the director of the Companies and for ousting the Petitioner from the management of the 2nd Respondent.

In replying to the issue of retrenchment benefits that was raised in the submission of the 3rd and the 4th Respondents, the Petitioner submits that if it was not for the Petitioner’s removal, the Petitioner would have been entitled to the same benefit for the sum of RM112,060.94 as a 50:50 equal partner.

The 3rd and the 4th Respondents dealt with the amount of RM415,615.02 as claimed by the Petitioner in two instances.

In the first instance, the amount of RM203,554.08 were payments made to the 3rd Respondent and his wife from the 1st Respondent’s account in CIMB Rawang Branch and these payments were part of the 7th Grievance that was rejected by the Court. The Petitioner is therefore precluded form claiming the same as it does not form part of the Proven Grievances. 19

The other part of the Petitioner’s claim amounting to RM212,060.94, the 3rd and the 4th Respondents submit that the first RM100,000.00 was a repayment of an interest free loan that the 3rd Respondent extended to the 2nd Respondent in April 2013. This can be seen in Exhibit JG-6 of the 3rd Respondent’s Affidavit.

The balance of RM112,060.94 was compensation that the 3rd Respondent received as retrenchment benefit. This benefit was paid to all staffs as part of the retrenchment exercise. The 3rd and the 4th Respondent submit that the Petitioner is not entitled to this payment as it is not a loss suffered as a result of the Proven Grievances.

The 3rd and the 4th Respondents further submit that, even if the Petitioner was employed as CEO of the 2nd Respondent, he would not have received the retrenchment benefit as it is not payable under his contract. A copy of the Petitioner’s employment contract is shown in exhibit JG-7 of the 3rd Respondent affidavit.

In replying to the issue of Crowe Howarth’s Forensic Audit Report dated 27.11.2012, the 3rd and the 4th Respondents submit that the 20 Report was not referred to in the Conspiracy Suit but in the Oppression Action. Therefore, the Petitioner’s submission in this matter is incorrect.

The wrongful withdrawals from the CIMB Bank Rawang Branch account form part of the grievance raised by the Petitioner in the section 181 Petition. This is what YA Datuk Wong said about this grievance: [105]…The thrust of the 2nd Grievance is that the 3rd and 4th Respondents, as the 2nd Respondent’s directors, have breached their fiduciary and statutory duties owed by the 3rd and 4th Respondents to the 2nd Respondent in failing to stop the payment of RM 672,000.00 [ for services which had not been provided by the 1st Respondent]. The 7th Grievance avers that the 3rd and 4th Respondents have dissipated Companies funds. In my view, the 7th Grievance concerns breaches of fiduciary and statutory duties owed by the 3rd and 4th Respondents to the Companies. I am of the opinion that the 2nd and 7th Grievances adversely affect the Companies and do not adversely affect the Petitioner as a member of the 1st Respondent. As held in Pan Pacific Construction Holdings Sdn Bhd and Jet-Tech Materials Sdn Bhd an act or omission is only actionable under s 181 CA if the act or omission adversely affects the plaintiff in a commercially unfair manner as a shareholder of the company in question. The Federal Court decided in Koh Jui Hiong at p. that s 191 CA would have been abused if the nature of the complaint is misconduct rather than mismanagement.” 21

In respect of this sum of RM415,615.02, the Petitioner’s contention is that the sum ought not to have been paid out to the 3rd Respondent and members of his family. This means that the payment was in breach of the fiduciary duties of the 3rd Respondent as a director of the Companies and the loss is suffered by the Companies and not by the Petitioner qua shareholder. It is for the liquidator of the Companies to take action to recover the payment. Since the Petitioner has contended that the Companies have no creditors and no outstanding loans or facilities any money recovered would be paid out to the Petitioner in proportion to his shareholding. It is not a loss suffered by the Petitioner and I find that the Petitioner is not entitled to this Head of Damage. 4th Head Of Damages: Compensatory Damages For Payments Paid

The Petitioner claimed for all payments paid to and/or expenses incurred in the illegal or unlawful appointment of additional directors amounting to a total of RM193,025.70 being RM85,000.00 in the 1st Respondent and RM108,025.70 in the 2nd Respondent. 22

The 3rd and the 4th Respondents had unlawfully appointed additional directors and removed the Petitioner as a director. YA Datuk Wong, in this regard, had found this unlawful appointment of additional directors had breached the ‘quasi-partnership’ between the Petitioner and the 3rd Respondent. He had also found that the 3rd and the 4th Respondents had breached the fiduciary duty to act in good faith towards the Petitioner.

Following this, the Petitioner submits that the 3rd and the 4th Respondents must be jointly and severally responsible for the monies paid to these unlawful additional directors.

The 3rd and the 4th Respondents submit that the Petitioner is not entitled to claim for these amount as these were payments made by the Companies to the additional directors although YA Datuk Wong had found that the appointment of the additional directors to be unlawful.

Furthermore, the 3rd and the 4th Respondents stress that the Petitioner would not have received these monies even if the additional directors were not appointed. 23

The Deputy Registrar found in favour of the Petitioner and awarded the sum of RM193,025.70 in favour of the Petitioner.

I agree with her. The appointment of additional directors is oppressive to the Petitioner. It is not necessarily a wrong to the Companies and the Companies may not be able to claim the sums paid from the 3rd and 4th Respondents. The 3rd and 4th Respondents should not have paid out those amounts to the additional directors and if they did not pay those amounts out, the amounts would still be in the Companies and the Petitioner would have been entitled to 50% of that sum. I accordingly find that the Petitioner is entitled to 50% of the sum paid out, in the sum of RM96,512.85. The 3rd and 4th Respondents have disputed the shareholding of the Petitioner in the Companies but I am satisfied that the Petitioner has proved that he is the beneficial owner of 50% of the shareholding in the Companies. Justice Hasnah at page 33 of her Ladyship’s Judgment held that: “Based on the Trust Deeds, both Jacob and Toralf are the de-facto owners of the Plaintiffs on 50-50 equal shareholding. Rozilah is merely a trustee in equal shares…” YA Datuk Wong in paragraph 137 of his Lordship’s Judgment held that: 24 “137. I am not able to accept the Respondents’ above contentions because…

(a)…

(b)the increase in the 1st Respondent’s paid-up share capital does not reflect the “quasi-partnership” nature of the 1st Respondent whereby the Petitioner and the 3rd Respondent are equal “ partners” and the 4th Respondent only holds the 4th Respondent’s shares in trust equally for the Petitioner and the 3rd Respondent.” 5th Head Of Damages: Compensatory Damages For Wasted And/Or Unnecessary And/Or Unjustified Legal And Counsel Fees Paid To Messrs Bodipalar Ponnudurai De Silva And 6th Head Of Damages: Compensatory Damages For Wasted,

Under the 5th Head Of Damages, the Plaintiff claims for a total of RM1,695,728.10 for payment of legal fees paid to Messrs Bodipalar Ponnudurai De Silva (“Bodipalar”). 25

The Plaintiff submits that since YA Datuk Wong had already ruled that there was no grand plan or conspiracy to defraud by the Petitioner, thus the commencement of the Conspiracy Suit was unnecessary, unjustified and a complete waste of funds by the 3rd and the 4th Respondents.

Hence, the Petitioner says it is entitled to claim for the sum of RM1,695,728.00 against the 3rd and the 4th Respondents as compensatory damages for the unnecessary Conspiracy Suit.

The 3rd and the 4th Respondents state that the Petitioner’s claim under this heading should not be allowed because legal fees does not form part of the grievances awarded by the Court.

The Petitioner had also withdrawn the 7th Grievance which included payments made to lawyers and experts and further submits that the Companies had to use up the monies in order to defend the Companies and their interest and these monies were not used by the 3rd and the 4th Respondents personally. 26

In relation to the 6th Head Of Damages above, the Plaintiff claims for payments made for the unjustified reports prepared by the following parties and used by the 3rd and the 4th Respondents: a. Baker Tilly Monteiro – RM37,936.00; b. Crowe Howarth – RM21,417.00; c. JR Control Risk – RM46,686.00; and d. Siaga Informatics – RM6,500.00.

Since YA Datuk Hasnah had rejected the evidence of these experts and both, YA Datuk Hasnah and YA Datuk Wong, had found that there was no conspiracy by the Petitioner, the reports were unnecessary and a waste of funds.

The Petitioner further submits that if monies were not spent, the company would have been able to distribute these monies to its shareholder.

Thus, the Petitioner claims for RM57,269.50 as compensation for the oppression caused by the 3rd and the 4th Respondents. 27

In justifying the payments made to the experts for preparation of various experts’ reports, the 3rd and the 4th Respondents submit the Companies had engaged with the forensic experts in order to defend the Companies and their interest and not for the personal benefit of the 3rd and the 4th Respondents.

The Deputy Registrar found that the claim for wasted legal fees does not form part of the Proven Grievances in the section 181 Petition and that it was natural for a company to engage experts and to obtain reports to defend in legal suit.

I agree that the Petitioner should not be entitled to those heads of damages. The losses suffered were suffered by the Companies and not the Petitioner. They were losses incurred in respect of the Conspiracy Suit and did not form part of the Proven Grievances in the section 181 Petition. In other words, they were not incurred because of the removal of the Petitioner from management of the Companies or the dilution of his shareholding. Furthermore, the losses were incurred by the Companies and not the Petitioner. The Petitioner cannot allege that because he owns 50% of the shares of the Companies, he is entitled to recover 50% of what the Companies can recover. Again, it is for the 28 liquidator of the Companies to pursue for the recovery of the wasted expenditure, if they have been incurred by the 3rd and 4th Defendants in breach of their fiduciary duties to the Companies. The Petitioner cannot claim for the losses sustained by the Companies. I make no finding that these expenses were paid out by the 3rd and 4th Respondents in breach of their fiduciary duties. The Conspiracy Suit was not struck out on the basis that it is frivolous or vexatious or an abuse of the process of the Court. It was dismissed after a lengthy full trial. It cannot be the case that if a company commences legal action against a party and is unsuccessful in the legal action and incurs costs, the directors who caused the company to commence the legal action must in all cases and necessarily be personally responsible for indemnifying the company in respect of the costs incurred.

In the premises, I find that the Petitioner is entitled to damages of RM 360,062.85 with interest at the rate of 5% per annum from date of order for assessment of damages until date of payment.

In conducting this exercise, I bear in mind the difference between a loss suffered by the company and a loss suffered by the shareholder personally. In the case of Johnson v Gorewood & Co [2002] 2 AC 1, it 29 was held that the proper plaintiff to sue for reflective loss is the company itself and not its shareholders: “Where a company suffers loss caused by a breach of duty owed to it, only the company may sue in respect of that loss. No action lies at the suit of a shareholder suing in that capacity and no other to make good a diminution in the value of the shareholder’s shareholding where that merely reflects the loss suffered by the company. A claim will not lie by a shareholder to make good a loss which would be made good if the company’s assets were replenished through action against the party responsible for the loss, even if the company, acting through its constitutional organs, has declined or failed to make good that loss”.

An exception to that principle was carved out in Giles v Rhind [2003] Ch 618 where Lord Millet said (at [34]): “One situation which his not addressed in [Johnson] is the situation in which the wrongdoer by the breach of duty owed to the shareholder has actually disabled the company from pursuing such cause of action as the company had. It seems hardly right that the wrongdoer who is in breach of contract to a shareholder can answer the shareholder by saying “ the company had a cause of action which it is true I prevented it from bringing, but that fact alone means that I the wrongdoer do not have to pay anybody”. 30

However, that exception does not apply in this case because there is nothing to stop the liquidator of the Companies from taking any necessary action to recover monies that may have been improperly siphoned off by the 3rd and 4th Respondents. There is no evidence to show that the liquidator will not be in a position to make claims against the 3rd and 4th Respondents. Accordingly, where the loss is suffered by the Companies, it is for the liquidator to claim against the 3rd and 4th Respondents.

In the premises, I allow the Petitioner’s appeal to the extent of awarding him damages of RM360,062.85 and interest with costs of RM5,000.00 subject to allocator and I allow the 3rd and 4th Respondents’ appeal partially in inter alia reducing the sum payable for the appointment of additional directors. There will be no order as to costs. Wong Chee Lin Judicial Commissioner Kuala Lumpur High Court Dated: 7th June 2018 31 Solicitors for the Petitioner Goik Kenwayne & Huam Wan Ying Messrs Dennis Nik & Wong Advocates & Solicitors No. 68-1, Jalan Telawi Bangsar Baru 59100 Kuala Lumpur Tel : 03-2284 7188 Fax: 03-2284 7088 Solicitors for the Respondents Fiona Bodipalar & David Morais Messrs Bodipalar Ponnudurai De Silva Advocates & Solicitors D3-1-8, Solaris Dutamas No. 1, Jalan Dutamas 1 50480 Kuala Lumpur