XXXX v XXXX (22NCVC-540-12/2011)

1.

2.

EE KEE CHAI … RESPONDENTS GROUNDS OF JUDGEMENT

The Applicant filed a Notice of Application dated 01.08.2019 (Enclosure 34) pursuant to Order 52 rule 4(1) of the Rules of Court 2012 (“ROC 2012”), seeking to initiate committal proceedings against the Respondents for alleged non-compliance with a Consent Judgment dated 16.07.2013.

After considering the affidavits filed, the written submissions of the parties, and the oral submissions of learned counsel, I dismissed the said application on 19.05.2025 without any order as to costs.

Below are the grounds of my decision.

The background facts in this case are gathered from the cause papers filed by the parties.

The facts material to the present application are largely undisputed.

The Applicant, the Second Respondent (“R2”) and the Third Respondent (“R3”) are directors and shareholders in the First Respondent (“R1”).

The dispute between the Applicant and R1 begun with the filing of this suit in December of 2011, almost nine (9) years ago. The Applicant had claimed directors' fees and emoluments which he believed was owing to him.

The Applicant and the R1 eventually entered into a Consent Judgment dated 16.07.2013 (“CJ”). The relevant parts of the CJ are reproduced as follows:

The R1 pays an ex-gratia sum amounting to RM50,000.00 to the Applicant within 30 days from the date of the CJ. after—

the R1 convenes an Extraordinary General Meeting ("EGM") within 21 days to approve and agree on voluntary winding up the R1 by the auditors/accountant of the R1;

(ii) the Applicant, the R2 and R3, as the shareholders of the R1, attend the EGM and approve the voluntary winding up of the R1;

(iii) the Applicant, the R2 and R3 sign or execute all the documents pertaining to the voluntary winding up of the R1;

upon voluntary winding up of the R1, any balance monies in the R1 shall be distributed to the Applicant, the R2 and R3 as shareholders of the R1 in accordance to their respective shareholdings;

all shares of Singa Motivasi Sdn. Bhd. (the “said shares of Singa Motivasi") held by the Applicant of which 50% are held for the Applicant, the R2 and R3 in a ratio of 30:30:40;

the Applicant, the R2 and R3 agree to sell all the said shares of Singa Motivasi held by the Applicant at the current best price with a minimum price of RM750,000.00;

the net profit from the sale of the said shares of Singa Motivasi is to be distributed to the Applicant, the R2 and R3 in a ratio of 30:30:40; and

the Applicant, the R2 and the R3 appoint both Messrs CM Yeo & Associates and Messrs Julie Lim, Vasanthan & Co. to represent them in the transaction of sale of the said shares of Singa Motivasi where the legal fees will be paid from the sale of the said shares of Singa Motivasi.

The Applicant contends that R2 and R3 had majority control of the R1, they had persistently refused to comply with the terms of the CJ since 2013 until today. More importantly, instead of voluntarily winding up the R1 and distributing the balance sum in the bank account, they had withdrawn the balance sum and closed down the bank account of the R1. They also refused to proceed with the sale of shares held jointly between them and the Applicant in another company called Singa Motivasi Sdn. Bhd. as required under the CJ.

Until today, the Applicant is still denied his rights to the balance sum in the R1 and the sale of shares in Singa Motivasi Sdn. Bhd. Hence, the Applicant had commenced this committal proceedings.

On 24.07.2019, the Court has granted leave for the Applicant to proceed the committal proceedings against the Respondents.

The CJ and its terms formed the substance of the two (2) applications before this Court, namely Enclosure 34 dan Enclosure 50 (an application by the Respondents to set aside the Order dated 24.07.2019 where leave was granted to commence committal proceedings against the Respondents).

The Court proceeded with the hearing of Enclosure 34 instead of Enclosure 50 based on the agreement of the parties. Proceedings have been heard on 18.08.2024, 15.10.2024, 20.11.2024,

05.03.2025, 07.04.2025 and 19.05.2025 respectively.

The present attempt to initiate committal proceedings was only pursued some six (6) years after the CJ was recorded.

The issues to be determined by this Court are as follows:

whether the Respondents breached the terms of the CJ;

whether there is an unreasonable and an inordinate delay in executing the CJ; and

whether the CJ is enforceable without the penal notice. S/N IF9Wj3kikmBqIqbDrLbyA ANALYSIS AND FINDINGS OF THE COURT

whether the Respondents breached the terms of the CJ

The Applicant alleged the Respondent has failed to comply with the terms of the CJ as follows:

the R1 had failed to convene an EGM to wind up the R1 voluntarily within 21 days from the date of the CJ;

the R1 had failed to distribute the balance sum of the R1 to the shareholders namely the Applicant, the R2 and R3 according to their respective shareholding; and

the R2 and R3 have failed to appoint law firms namely Messrs CM Yeo & Associates and Messrs Julie Lim, Vasanthan & Co to represent them in the transaction of sale of the said shares of Singa Motivasi.

It is not disputed that the terms in the CJ have been agreed by the parties.

The Applicant submitted that the Respondents, being directors and shareholders of the R1, had full knowledge of the CJ and were under an obligation to ensure compliance with its terms.

It was contended that the Respondents had failed to carry out the obligations stipulated in the CJ including matters relating to winding-up, distribution of monies, and sale of shares, and that such failures amounted to contempt of court.

The Applicant contends that R2 and R3 had caused the R1 to act contrary to and/or circumvent the terms of the CJ, and the breach is serious enough to frustrate the terms of the CJ and render it nugatory.

The Applicant submits that failure to adhere to the terms of the Consent Judgment amounts to contempt of court. The Applicant has relied on the case of Fortune Pacific Engineering Co Ltd v Gajatakraw Industries Sdn Bhd [2010] 5 CLJ 590 and the case of Muhammad Said Amin v Haszeri Hussin [2014] 3 CLJ 536 to support its contentions.

The Applicant further argued that issues of delay and procedural compliance as contended by the Respondents should not defeat the application, as the breaches complained of were still ongoing and have yet to be remedied.

The Respondents opposed the application on both procedural and substantive grounds. They submitted that the application was vitiated by inordinate and unexplained delay, the CJ having been S/N IF9Wj3kikmBqIqbDrLbyA recorded in 2013 while the committal application was only initiated in 2019.

It was further submitted that the CJ did not contain the requisite penal endorsement and that this omission was fatal to the Applicant’s attempt to commence committal proceedings.

The Respondents also contended that the matters complained of arose from ongoing corporate and shareholder disputes and were not suitable to be ventilated through contempt proceedings.

In order to determine whether the Respondents have violated the terms of the CJ, I shall examine the terms of the CJ as agreed by the Parties. Payment of the ex-gratia sum of RM50,000.00 to the Applicant

The Applicant does not plead any complaint pertaining to ex-gratia sum of RM50,000.00 in his Statement (Enclosure 32). Hence, it is not disputed that ex-gratia sum of RM50,000.00 was duly paid to and received by the Applicant within the time stipulated under the CJ. Parties to convene an EGM within 21 days of the CJ to approve and agree to wind up the R1 voluntarily by its auditor/accountant.

An EGM was convened on 30.08.2013 and the minutes of this meeting are in exhibit J-3 in Enclosure 51. The EGM was held well within the 21 days of the CJ.

Therefore, the allegation of the Applicant that the Respondents did not comply with this term is devoid of merits. The Applicant, R2 and R3 as shareholders of the R1 are to attend the said EGM and approve the voluntary winding up of the R1 The Applicant, R2 and R3 shall sign/execute all documents related to the voluntary winding up of the R1

Paragraph 3 of the minutes of the meeting (see exhibit J-3 in Enclosure 51) stated as follows: “MEMBERS' VOLUNTARY WINDING-UP That the proposal by V Jayaranam a/l VA Vellasamy for the company to apply to companies Commission of Malaysia to strike off the company under Section 308 of the Companies Act 1965 was agreed by the all the other members of the company. That all the members voted unanimously not to proceed with the voluntary winding up of the company for the time being.”. [Emphasis added]

It is pertinent to note that the Applicant has proposed to depart from the terms of the CJ and the R2 and R3 have agreed with the proposal. The Parties then agreed to chart a new course, namely to have the R1 struck off the company under section S/N IF9Wj3kikmBqIqbDrLbyA 308 of the Companies Act 1965 [Act 125] rather than to proceed to wind up R1 voluntary.

Since the Parties have agreed to depart from the agreed terms of the CJ, it is also clear that these two provisions are no longer applicable.

I find the departure from the CJ's terms for voluntary winding up is not the fault of any of the parties and it is misplaced for the Applicant to place the blame solely on R2 and R3 when he is also a director and shareholder with similar powers etc., and he was the one who suggested that the voluntary winding scheme be departed from in favour of a company striking off procedure.

Further, one of the directors of the R1 has on 17.01.2014 (see exhibit J-4 in Enclosure 51) written to Commission of Companies of Malaysia (“CCM”) to enquire the status of the application to strike out the R1 under section 308 of Act 125. The 2nd page of exhibit J-4 in Enclosure 51 is an email which stated the notice to strike out R1 under section 380 of Act 125 was made on 27.09.2012.

The CCM has vide a notice dated 16.03.2016 (see 3rd page of exhibit J-4 in Enclosure 51) notified the R1 that the R1 will be struck off from the registration within one (1) month of notice if R1 failed to provide whether R1 is still running its business.

Since there was a notification by CCM on the striking out R1, no necessary action needs to be taken by the R2 and R3. No other claim will arise between the Applicant, R2 and R3 in relation to the subject matter of this action and the R1

CJ recorded between the Parties was to finalize the issues and put an end to all disputes between the parties relating to this action and the R1. Therefore, the CJ amounts to an estoppel against the parties for any further relitigating. After the voluntary winding up, any balance monies in the R1 shall be distributed amongst its shareholders in accordance to shareholding

The Applicant has alleged (including lodged a Police report against R2 and R3) that they had appropriated monies belonging to the R1 for their own personal benefit.

The Respondents have explained in their Affidavits (Enclosure 51) on this issue that—

monies were withdrawn because the R1's account had to be closed as a pre-condition to the striking-off of the company (see paragraph 25 page 11 of Enclosure 51);

how these monies were banked into the client's account of the R1's auditors (see paragraph 26 page 12 of

a directors' resolution was recorded dated 13.05.2015 authorizing the monies held by the auditor to be placed into fixed deposit account of R2 and R3 (see Exhibit J-5 of Enclosure 51).

Since R1 has yet to be wound up or struck off, as such, the monies of the R1 cannot be distributed.

During the hearing of the Enclosure 34, I have directed the parties to check the status of R1 and get the auditor to audit the accounts of R1 in order to determine the balance of the money in the account of R1 and to facilitate the close down of R1.

The Applicant alleges that the R2 and R3 has withdrawn the sum of RM289,525.00 from the account of R1. The R2 and R3 averred that the total sum held by them is only RM138,890.90.

The matter has been adjourned a few times for the parties to appoint an auditor and to finalize the account of R1. Despite the final date given by the court on 19.05.2025, the Applicant still failed to produce the auditor’s report. I then dismissed Enclosure 34 filed by the Applicant for the reasons stated below. S/N IF9Wj3kikmBqIqbDrLbyA The Applicant, R2 and R3 agree that the Applicant's shares in a company known as Singa Motivasi Sdn. Bhd. are held by the Applicant for the Applicant, R2 and R3 based upon a 30:30:40 ratio The Applicant, R2 and R3 agree to sell the Applicant's shares in the said Singa Motivasi Sdn. Bhd. at a best possible price with a minimum price of RM750,000.00 The net profit from the sale of the said Singa Motivasi Sdn. Bhd. shares shall be distributed amongst the Applicant, R2 and R3 based upon a 30:30:40 ratio The Applicant, R2 and R3 appoint Messrs CM Yeo & Associates and Messrs Julie Lim,Vasanthan & Co. to jointly represent the Applicant, R2 and R3 as regards the sale of Singa Motivasi Sdn. Bhd.'s said shares where legal fees will be paid from the proceeds of the said sale of shares

The Applicant has never in any of his averments of his affidavits filed stated that he has been able to secure a buyer for these shares with a minimum price of RM750,000.00. The Respondents have at paragraph 48 of Enclosure 51 specifically denied that the said RM750,000.00 minimum sale price has ever been met. Indeed, the Applicant has admitted this at S/N IF9Wj3kikmBqIqbDrLbyA paragraph 61 of Enclosure 57 but placed the blame on the failure to appoint lawyers to carry out the sale.

The Applicant complains that he has been frustrated by R2 and R3 in the disposal of Singa Motivasi's shares when the very precondition of any such sale, namely that the minimum sale price of RM750,000.00 be met, has never occurred. Hence, the Applicant’s complaint is baseless and on this score is wholly premature.

I refer to the letter from Messrs. Yeo & Associates dated 05.08.2013 (see exhibit J-6 in Enclosure 51) written to Messrs. Julie Lim, Vasanthan & Co., who was representing the Applicant that the other two shareholders of Singa Motivasi offer to buy to 50% share of the Applicant at the price of RM764,000.00 and the Sale and Purchase Agreement would be prepared if the other two shareholders agreed with it.

Since there is no buyer to buy the said Singa Motivasi shares at the minimum selling price of RM750,000.00, therefore there is no reason to appoint any lawyers to transact that sale when there was no sale to begin with.

I find the Applicant has been putting all the responsibility to call meetings and make decisions upon R2 and R3 when S/N IF9Wj3kikmBqIqbDrLbyA in fact the Applicant could also himself call meetings to seek to transact company business. He had totally failed to do so. The Applicant has not shown nor alluded to even one instance where he had requested for a company meeting to be held.

Committal proceedings are quasi-criminal in nature. The liberty of the subject is at stake. It is therefore trite law that strict compliance with procedural requirements is mandatory. As such, it is a fundamental principle that no man's liberty shall be taken away unless every requirement of the law has been strictly complied with. Reference is made to the Federal Court's decision in the case of Tan Sri Dato' (Dr) Rozali Ismail & Ors. v Lim Pang Cheong & Ors. [2012] 3 MLJ 458.

The Court’s contempt jurisdiction is exceptional and must be exercised with restraint. It is not intended to be used as a substitute for ordinary enforcement mechanisms or to resolve commercial disputes between parties.

The application also seeks to invoke the Court’s contempt jurisdiction in relation to disputes arising from joint management and shareholder relations, matters which are ill-suited for determination through committal proceedings.

Having examined the affidavits, I am not satisfied that the Applicant has established, to the requisite standard, any willful and deliberate disobedience of the CJ by the Respondents.

whether there is an unreasonable and an inordinate delay in executing the CJ

In the present case, the CJ was recorded on 16.07.2013. The Applicant’s attempt to initiate committal proceedings only materialized nearly six (6) years later.

No satisfactory explanation has been offered for this prolonged delay. In the context of committal proceedings, such delay is a material consideration and undermines the allegation of willful and contumacious disobedience.

The Applicant is guilty of laches by delaying in filing the application to enforce the CJ if what he alleged was true. Laches is a doctrine of equity where the Court can deny relief sought by the Applicant when the Applicant asserting the claim to the detriment of the Respondents brings its claim late and without good reason. The doctrine of equity prevents the court from granting the Applicant relief, even if the claim is otherwise valid, based on the principle that “equity aids the vigilant, not the negligent”.

whether the CJ is enforceable without the penal notice

The CJ relied upon does not contain a penal endorsement in the form required for enforcement by committal. There is no penal indorsement in Form 83 attached to the CJ.

Order 52 rule 2 of the ROC 2012 provides that—

"Committal for contempt of Court (O. 52, r. 2) The Court may, on the application of any party to any cause or matter or on its own motion, make an order of committal in Form 107. [Emphasis added]

However, pursuant to Order 45 rule 7(4) of the ROC 2012, there can be no enforcement or committal proceedings against a person, body or entity should the judgment or order not be served onto the said person, body or entity. Order 45 rule 7(4) states as follows: ''(4) There shall be endorsed on the copy of an order served under this rule a notice in Form 83 informing the person on whom the copy is served—

in the case of service under paragraph (2), if he neglects to obey the order within the time specified therein, or, if the order is to abstain from doing an act, that if he disobeys the order, he is liable to process of execution to compel him to S/N IF9Wj3kikmBqIqbDrLbyA obey it; and

in the case of service under paragraph (3), that if the body corporate neglects to obey the order within the time so specified or, if the order is to abstain from doing an act, that if the body corporate disobeys the order, the body corporate is liable to process of execution to compel the body to obey it.". [Emphasis added]

Therefore, based on the Court of Appeal decision in Samsudin bin Mohamad Fauzi & Anor. v Yayasan Ihsan Rakyat [2020] MLJU 2567, I am guided as follows: “[24] …the constitutional and statutory footing to punish for contempt is contained in Article 126 of the Federal Constitution empowers the Federal Court, the Court of Appeal and the High Courts to punish any contempt of itself as well as in s 13 of the Courts of Judicature Act 1964. [25] As a person, if found guilty of contempt, may be punished with a term of imprisonment, the Courts have seen to it that the procedural safeguards provided for in the rules for a contempt action are scrupulously followed. In Re B (JA) (An Infant) [1965] 1 Ch 1112 Cross J had this to say: "Committal is a very serious matter. The courts must proceed very carefully before they make an order to commit to prison; and rules have been laid down to secure that the alleged contemnor knows clearly what is being alleged against him and has every opportunity to meet the allegations. For example, it is provided that there must be personal service of the motion on him even S/N IF9Wj3kikmBqIqbDrLbyA though he appears by solicitors, and that the notice of motion must set out the grounds on which he is said to be in contempt; further, he must be served as well as with the motion, with the affidavits which constitute the evidence in support of it. It is clear that if safeguards such as these have not been observed in any particular case, then the process is defective even though in the particular case no harm may have been done. For example, if the notice has not been personally served the fact that the respondent knows all about it, and indeed attends the hearing of the motion, makes no difference. In the same way, as is shown by Taylor v Roe, if the notice of motion does not give the grounds of the alleged contempt or the affidavits are not served at the same time as the notice of motion, that is a fatal defect, even though the defendant gets to know everything before the motion comes on, and indeed answers the affidavits. [26] Such a strict approach was followed by Lord Denning MR in McIlraith v Grady [1968] 1 QB 468 where it was observed at p 477 as follows: “The second appeal is as to the committal order. Here we must remember the fundamental principle that no man's liberty is to be taken away unless every requirement of the law has been strictly complied with.” [27] As the proceeding for contempt is quasi-criminal in nature it was held in Re Bramblevale Ltd [1970] 1 Ch 125, by Lord Denning MR that the proof is beyond reasonable doubt as follows at p 137: “A contempt of court is an offence of a criminal character. A man may be sent to prison for it. It must be satisfactorily proved. To use the time honoured phrase, it must be proved beyond reasonable doubt." S/N IF9Wj3kikmBqIqbDrLbyA See the cases of Chanel Ltd v FGM Cosmetics [1981] FSR 471 and Chiltern District Council v Keane [1985] 2 All ER 118, where the strictness of compliance with the procedure were reiterated. Our Federal Court in Tan Sri Dato' (Dr) Rozali Ismail & Ors v Lim Pang Cheong @ George Lim & Ors (supra) had followed the same strict approach: "[29] It is settled law that committal proceeding is criminal in nature since it involves the liberty of the alleged contemnor. Premised upon that, the law has provided for procedural safeguards in committal proceeding which requires strict compliance." … Whether the order said to have been breached by the alleged contemnor must have a penal endorsement … [54] We adopt the same approach as the Court of Appeal in its decision in Loh Eng Leong & Anor v Lo Mun Sen & Sons Sdn Bhd & Anor [2003] 4 MLJ 284 on the mandatory rule found in O 45 r 7(4) ROC 2012 where at page 286 it was held by the Court of Appeal as follows: "It is true, as contended by learned counsel for the appellants, that a failure to indorse the order of court with a penal notice is fatal to an application for committal (see Leow Seng Huat v Low Mui Yein [1996] 5 MLJ 381; General (Rtd) Tan Sri Hashim Mohd Ali & Anor v Francis a/l MG Mirandah [2000] MLJU 436; Gribbles Pathology (M) Sdn Bhd v Adventist Hospital & Clinic Services (M) Bhd [2002] MLJU 619; [2003] 1 CLJ 321). The Rules of the High Court 1980 ('the RHC') provide for the instances where an order S/N IF9Wj3kikmBqIqbDrLbyA of court can be indorsed with a penal notice pursuant to which an order of committal can be made. Reference is first made to O 42 r 6 of the RHC ('r 6') which reads as follows:

Subject to paragraph (2), a judgment or order which requires a person to do an act must specify the time after service of the judgment or order, or some other time within which the act is to be done. [55] It was further held at pages 289-290 as follows: "It is therefore clear that where an order of court to do an act must specify the time within which an act is to be done then such time must be specified. It is only in such cases that there can be indorsement with the penal notice. As the indorsement with the penal notice is a prerequisite to the making of a committal order which involves the liberty of the subject it is particularly important that the relevant rules are duly complied with (see Nicholls v Nicholls (1977) 147 NLJ 61; Allport Alfred James v Wong Soon Lan [1989] 1 MLJ 338]". [56] Such a failure is fatal to the plaintiff's action for contempt and indeed the whole contempt action is unsustainable and the contempt order made has to be set aside.”. [Emphasis added]

Reference is made to page 846 Malaysian ROC 2012, An Annotation (Lexis Nexis) as follows: “45/7/3. Penal Notice. The copy of the order must be endorsed with a notice in App. A Form 83 informing the person on whom the S/N IF9Wj3kikmBqIqbDrLbyA copy is served that "if he neglects to obey the order within the time specified therein, or, if the order is to abstain from doing an act, that if he disobeys the order, he is liable to process of execution to compel him to obey it". It has been held that the court has a discretion to order committal even if no penal notice is incorporated in a judgment or order requiring a person to abstain from doing an act. Such a discretion does not extend to the situation in which the iudgment or order requires the person to do a positive act.”. [Emphasis added]

Therefore, the failure to endorse the penal clause in CJ is fatal to the Applicant’s application for committal.

Considering the nature of committal proceedings in general, the inordinate delay of the Applicant, the procedural deficiencies of this application, and the absence of clear proof of willful disobedience by the Respondents, I find that the Applicant has failed to satisfy the threshold required to invoke the Court’s contempt jurisdiction.

Accordingly, Enclosure 34 is dismissed with no order as to costs. Dated 10 January 2026 S/N IF9Wj3kikmBqIqbDrLbyA Signed by SGD .............................................. WONG MEE LING Judge High Court of Malaya Johor Bahru Johor Darul Ta’zim. Counsel/Solicitor For the Applicant: Ms. Nur Fateha Roslan Messrs Chee Siah Le Kee & Partners Counsel/Solicitor For the Respondent: Mr. T S Chang