Wan Abdullah Mujahid Bin Hasanuddin v 1. ) Edwin Lee (WA-22NCC-359-06/2024)

AND EDWIN LEE

EDMUND WONG WEI LUN (NRIC NO.: 960123-14-5057) …DEFENDANTS GROUNDS OF JUDGMENT A. Introduction Interim Orders Sought by the Plaintiff 1. The Plaintiff seeks, inter alia, to restrain the Defendants from dealing with 500,000 shares in the company known as Cita Layar Sdn Bhd, to restrain from the utilization of funds held by the company by the S/N 9Uxv3mfP0ueKvXCtkT0Lw  Defendants and to stop the Defendants from undertaking any business that may infringe Malaysian gaming and anti-money laundering laws. Cause of Action against the Defendants 2. The Plaintiff claims that he is the sole holder of 500,000 shares in the company known as Cita Layar Sdn Bhd. (CLSB). The said company is involved in online gaming and e-sports activities.

He claims that the Defendants had unlawfully transferred the 500,000 shares to 2nd Defendant. He also claims that after undertaking an investigation into the affairs of the company he found that the said shares were fraudulently transferred to the 2nd Defendant without his authorization. He further claims that the transfer forms for the said shares were not executed by him and the transfer of the shares into the name of 2nd Defendant were wrongful. He has since filed a police report on this issue dated 27-3-2024 and 10-5-2024.

He also recently found that the business of the said company was unlawfully utilised for an illegal activity i.e. online gambling and was S/N 9Uxv3mfP0ueKvXCtkT0Lw  involved in an alleged money laundering activity. As a result, the Plaintiff and the 2nd Defendant were subject to a police investigation and the accounts of the said company have since been subject to a freezing order dated 12-3-2024 by the Police.

The Plaintiff further claims that he was the sole authoriser to the accounts held by the said company. To his surprise the Defendants decided to change the accounts signatories to themselves. This was allegedly not authorized by the Plaintiff.

The Defendants deny any wrongdoing and claim that the Plaintiff had agreed to transfer his shares to the Defendants and that he was no longer involved in the business of the said company. This was alleged by Defendants due to the bad financial reputation of the Plaintiff.

The said transfer documents were validly stamped and were approved by the authorities. S/N 9Uxv3mfP0ueKvXCtkT0Lw 

The Defendants further deny that they or the company was involved in any illegal activity despite the investigations undertaken by the authorities. B. Applicable Law for an Interlocutory Injunction 8. The applicable principle in whether or not a Court should grant an interlocutory injunction as prayed for by the Plaintiff is trite. I refer to Keet Gerald Francis Noel John v Mohd Noor @ Harun Abdullah & Ors [1995] 1 CLJ 293 where Gopal Sri Ram JCA (as he then was) held: - “To summarise, a Judge hearing an application for interlocutory injunction should undertake an inquiry along the following lines: - first, he must ask himself whether the totality of the facts presented before him discloses a bona fide serious issue to be tried. He must, when considering this question, bear in mind that the pleadings and evidence are incomplete at that stage. Above all, he must refrain from making any determination on the merits of the claim or any defence to it. It is sufficient if he identifies with precision the issues raised on the joinder and decides whether these are serious S/N 9Uxv3mfP0ueKvXCtkT0Lw  enough to merit a trial. If he finds, upon a consideration of all the relevant material before him, including submissions of Counsel, that no serious question is disclosed, that is an end of the matter and the relief is refused. On the other hand, if he does find that there are serious questions to be tried, he should move on to the next step of his inquiry; second, having found that an issue has been disclosed that requires further investigation, he must consider where the justice of the case lies. In making his assessment, he must take into account all relevant matters, including the practical realities of the case before him. He must weigh the harm that the injunction would produce by its grant against the harm that would result from its refusal. He is entitled to take into account, inter alia, the relative financial standing of the litigants before him. If after weighing all matters, he comes to the conclusion that the plaintiff would suffer greater injustice if relief is withheld, then he would be entitled to grant the injunction especially if he is satisfied that the plaintiff is in financial position to meet his undertaking in damages. Similarly, if S/N 9Uxv3mfP0ueKvXCtkT0Lw  he concludes that the defendant would suffer the greater injustice by the grant of an injunction, he would be entitled to refuse relief. Of course, cases may arise where the injustice to the plaintiff is so manifest that the Judge would be entitled to dispense with the usual undertaking as to damages (see: Cheng Hang Guan v. Perumahan Farlim (Penang) Sdn. Bhd. 1988] 1 CLJ 435 (Rep);[1988] 3 MLJ 90). Apart from such cases, the Judge is entitled to take into account the plaintiff's ability to meet his undertaking in damages should the suit fail, and, in appropriate cases, may require the plaintiff to secure his undertaking, for example, by providing a bank guarantee; thirdly, the Judge must have in the forefront of his mind that the remedy that he is asked to administer is discretionary, intended to produce a just result for the period between the date of the application and the trial proper and intended to maintain the status quo, an expression explained by Lord Diplock in Garden Cottage Foods Ltd. v. Milk Marketing Board [1984] AC 130 and applied in Cheng Hang Guan (supra). It is a judicial discretion capable of correction on appeal. Accordingly, the Judge would be entitled to take into account all discretionary considerations, such as delay in S/N 9Uxv3mfP0ueKvXCtkT0Lw  the making of the application or any adequate alternative remedy that would satisfy the plaintiff's equity, such as an award of monetary compensation in the event that he succeeds in establishing his claim at the trial. Any question going to the public interest may, and in appropriate cases should, be taken into account. A Judge should briefly set out in his judgment the several factors that weighed in his mind when arriving at his conclusion.”

I also refer to the decision of Kamaludin Md Said JCA in Perak Hydro Renewable Energy Corporation Sdn Bhd & Anor v Wak Ngah Pili Bah Adim [2022] 10 CLJ 540: - “Damages Is An Adequate Remedy [60] It was also held in Keet Gerald Francis Noel John v. Mohd Noor @ Harun bin Abdullah & Ors (supra) that the judge would be entitled to take into account all discretionary considerations, such as any adequate alternative remedy that would satisfy the plaintiff's equity, such as an award of monetary compensation in the event that he succeeds in establishing his claim at the trial. S/N 9Uxv3mfP0ueKvXCtkT0Lw  [61] It is the defendants' submission that damages will be an adequate remedy to the plaintiffs should the court refused to grant the interlocutory injunction sought by the plaintiffs. [62] The defendants submitted that despite praying for a declaration against the defendants, the plaintiffs have also prayed for damages in the amended statement of claim. This can be seen in para. 61(n) of the amended statement of claim where the plaintiffs' prayed for the defendants to pay damages to the plaintiffs for trespass and damages be assessed by the court. We are aware the damages are for the trespass to lands if the plaintiffs succeed in their claim. [63] Be that as it may, the prayer indicates that damages are an adequate remedy in the circumstances. Therefore, the basis for exercising the court's equitable jurisdiction does not arise in this action. Associated Tractors Sdn. Bhd v. Chan Boon Heng & Anor [1990] 2 CLJ 157; [1990] 1 CLJ (Rep) 30; [1990] 2 MLJ 408 is a case where an injunction was not granted by the court on the basis that the damages would be an adequate remedy. Hashim Yeop Sani CJ held as follows: S/N 9Uxv3mfP0ueKvXCtkT0Lw But it would seem quite clear that the most important factor to consider as a matter of principle is the question of whether in lieu of the injunction damages would be an adequate and proper remedy because in the matter of injunctions and exercising its jurisdiction the Court acts upon the principle of preventing irreparable damage. As Lindley LJ said in London & Blackwell Rly. Co. v. Cross [1986] 31 Ch D 354 at p. 369: The very first principle of injunction law is that you do not obtain injunctions for actionable wrongs for which damages are the proper remedy. ... Therefore, the injunction was in our view not properly granted. In a case like this, it would be more appropriate to order an early hearing of the application to strike out the counter claim and the application for summary judgment rather than to grant the injunction. [64] The High Court in Kawood Sdn Bhd v. HSBC Bank Malaysia Bhd & Ors [2001] 8 CLJ 363; [2001] MLJU 650, held that in the S/N 9Uxv3mfP0ueKvXCtkT0Lw  statement of claim, the plaintiffs are claiming for damages to be assessed together with interest. By its own admission, the plaintiff acknowledged that damages are an adequate remedy and can be assessed and quantified. As such, the court said that there is no basis to grant the injunction to the plaintiff. [65] Similarly, in Kilang Kosfarm Sdn Bhd v. Kosma Nusantara Bhd (No 2) [2002] 3 CLJ 165; [2002] 5 MLJ 662, Ramli Ali J (as he then was) held that the plaintiff have prayed in prayers 3 and 4 of the statement of claim for general and exemplary damages and to ascertain the damages suffered by the plaintiff from the time the plaintiff was expelled from the said estate until the time when vacant possession of the said estate is handed over to the plaintiff as prayed in prayer 2 of the statement of claim. On all those provisions, His Lordship satisfied those damages seem to be a suitable and adequate remedy for the plaintiff. [66] In the circumstances of this case and the application for interlocutory injunction, it is our considered view that the damages are an adequate remedy and therefore the court will refuse the grant of the interlocutory injunction sought by the plaintiffs.” S/N 9Uxv3mfP0ueKvXCtkT0Lw 

I further refer to the decision of the Court of Appeal in Sabil Mulia (M) Sdn Bhd v Pengarah Hospital Tengku Ampuan Rahimah & Ors [2005] 2 CLJ 122 where Gopal Sri Ram JCA held: - “That brings us to the second issue, namely, whether an injunction should be granted on the merits of the case before us. Of course, the usual practice of this court once we find that the court below has wrongly rejected an application on jurisdictional grounds is to remit the case to the judge to decide the case on merits. But this is not an ordinary case. Here all the material relevant to the exercise of discretion was before us and the matter is, as we have already said, one of urgency. We therefore considered this to be an appropriate case for us to decide whether the merits justify the grant of the injunction sought. In our view they do not. This is a case of a pure breach of contract. Learned counsel for the appellant cited a number of recent cases where equitable estoppel has been elevated to the status of a constructive trust because of some unconscionable behaviour on the part of the S/N 9Uxv3mfP0ueKvXCtkT0Lw  representee. The cases include Yaxley v. Gotts [2000] 1 All ER 711, Gillette v. Holt [2000] 2 All ER 289. We may add that useful reference may also be made to Birmingham Midshire Mortgage Services v. Sabherwal 80 P & CR 256 where Robert Walker LJ (now Lord Walker) said that in certain situations, for example, a family arrangement, "the concepts of trust and equitable estoppel are almost interchangeable". Relying on this line of authority counsel argues that there subsists a constructive trust in his client's favour because (i) the respondents made a representation that the canteen contract would be renewed; (ii) the appellant, encouraged by the representation and acting upon it, expended money in refurbishing the premises in question, employing additional staff and purchasing new equipment; (iii) the conduct of the respondents in reneging on their promise and awarding the canteen contract to the 4th respondent is unconscionable. Now, if you look at the cases relied on by counsel, you will find that the court in each case imposed a constructive trust to protect a litigant's interest in immovable property. Here, the appellant has no interest whatsoever in the immovable property in which the canteen is situated. All that the appellant has is a purely S/N 9Uxv3mfP0ueKvXCtkT0Lw  contractual right to run the canteen at the respondents' premises: nothing more. And if the appellant establishes a breach of contract at the trial of the action then he will be entitled to an award of damages in the ordinary way. So, all that the appellant complains about is readily compensated by a monetary award. Since monetary compensation is an adequate remedy, it follows that in accordance with well settled principles governing equitable discretion, specific relief is inappropriate in the circumstances of this case.” C. Application to the Facts of this case

There are serious issues to be tried 10. It is clear to this Court that the Plaintiff has shown the existence of a bona fide claim and the existence of a serious issue to be tried in his Claim against the Defendants.

The Plaintiff claims that he is the registered and beneficial owner of the shares in the company and that the said shares were fraudulently transferred out from his control by the Defendants. S/N 9Uxv3mfP0ueKvXCtkT0Lw 

I note, as stated earlier, that the Defendants dispute the above and claims that this was a valid transaction. Nevertheless, at this stage, this Court cannot make any determination on whether the Plaintiff claim is correct. All that is needed to be shown is the existence of a valid bona fide dispute that requires determination at trial. This has been shown by the Plaintiff.

(ii) Balance of convenience is to retain the status quo pending the outcome of the trial 13. I also find that the status quo should also be maintained pending the outcome of this suit. The said shares and the monies retained in the said account should not be utilized or subject to any transaction until the Plaintiff’s claim is disposed of.

The balance of convenience of retaining the status quo is also evident by the fact that the monies in the said account have also been subject to a freezing order under the applicable laws. There is therefore no harm in ensuring that the said sums be kept intact pending the outcome of this suit. S/N 9Uxv3mfP0ueKvXCtkT0Lw 

I also find that the Defendants will not be prejudiced by the orders sought here pending the outcome of the suit. After all, the said funds have been frozen by the said authorities and are still subject to the outcome of the investigation by the Police and all relevant authorities.

(iii) Damages is not adequate and there are valid considerations to grant such orders 16. I also find that damages are not adequate as there may be penal considerations that the Plaintiff will suffer if the said orders are not allowed.

Furthermore, it is best that the status quo be maintained as to allow the Defendants to continue running the business as they have done in the past may lead to further queries by the authorities and potential liability on the part of the Defendants. S/N 9Uxv3mfP0ueKvXCtkT0Lw 

In the circumstances, I find that the Plaintiff has shown the necessary requirements for the exercise of this Court’s discretion to grant such interlocutory orders. I also do not find any reason why the interlocutory injunction orders as prayed for by the Plaintiff should not be allowed in this case.

For the above reasons, I allow the Plaintiff’s application in Enclosure 4 subject to Prayer 1 to only stopped any illegal activities. The said orders are subject to the usual undertaking by the Plaintiff for any damages suffered by the Defendants. Dated 19th September 2024 Dato’ Indera Mohd Arief Emran bin Arifin Judge High Court of Malaya at Kuala Lumpur NCC 5 S/N 9Uxv3mfP0ueKvXCtkT0Lw  Counsel: Farhanna binti Roslan together with Nur Anis Syafiqah (pupil in chambers) for the Plaintiff Messrs. Wan Nurliyana & Farhanna Advocates & Solicitors Zeti Zulfah binti Hassan @ Zulkifli together with Nurul Hafidzah binti Hassan and Khairun Nissa (pupil in chambers) for the Defendants Messrs. Khalisa & Co.