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DALAM MAHKAMAH RAYUAN, MALAYSIA (APPEAL JURISDICTION)
RAYUAN SIVIL/RAYUAN NO W-02(IM)(NCC)-2748-12/2013
BETWEEN
ILUSTRASI HIKMAT SDN BHD PERAYU
AND
TAN SRI DATO SERI SYED MOKHTAR SHAH BIN SYED NOR .RESPONDEN
DALAM MAHKAMAH RAYUAN, MALAYSIA (APPEAL JURISDICTION)
RAYUAN SIVIL/RAYUAN NO W-02(IM)(NCC)-2749-12/2013
BETWEEN
ILUSTRASI HIKMAT SDN BHD PERAYU
AND
TRADEWINDS (M) BHD .RESPONDEN
DALAM MAHKAMAH RAYUAN, MALAYSIA (APPEAL JURISDICTION)
RAYUAN SIVIL/RAYUAN NO W-02(IM)(NCC)-2750-12/2013
BETWEEN
ILUSTRASI HIKMAT SDN BHD PERAYU
AND
PADIBERAS NASIONAL BERHAD .RESPONDEN
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(DALAM MAHKAMAH TINGGI DI KUALA LUMPUR) GUAMAN NO: 22NCC-331-04/2013
ANTARA
ILUSTRASI HIKMAT SDN BHD PLAINTIF
DAN
TAN SRI DATO SERI SYED MOKHTAR SHAH BIN SYED NOR
TRADEWINDS (M) BHD PADIBERAS NATIONAL BERHAD BUDAYA GENERASI SDN BHD .. DEFENDAN-DEFENDAN
CORAM:
Y.A DATO ALIZATUL KHAIR BINTI OSMAN KHAIRUDDIN, HMR Y.A. DATO ABDUL AZIZ BIN ABD. RAHIM, HMR
Y.A DATUK DAVID WONG DAK WAH, HMR
JUDGMENT OF THE COURT
Introduction:
1. Before us are three appeals against the decision of the High Court in
which the learned Judge allowed an application by the
Respondents/1st, 2nd and 3rd Defendants to strike out the statement of
claim of the Appellant/Plaintiff premised on Order 18 rule 19 of the
2012 Rules.
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2. We heard the appeals and after due consideration to respective
submissions of counsel, we allowed the appeals and now give our
reasons.
3. For the purpose of this Judgment, the parties shall be referred as
Plaintiff and Defendants as in the High Court.
Striking out principles:
4. The legal principles relating to striking out pleadings are settled and
there are numerous Judgments setting out those principles.
5. The Plaintiff has a right to access to Court and with it the right to have
his day in Court. Hence case laws dictate that Court should only
exercise its power to strike out only in exceptional circumstances. One
such circumstance is that on the pleadings themselves and assuming
that they are true, they do not disclose any cause of action. The Court
will also strike out an action which is clearly time-barred even if parties
do not dispute the existence of a cause of action and the date the
cause of action accrued. In both circumstances, there is no dispute as
to the factual matrix of the statement of claim. Hence when there is a
dispute as to the factual matrix of the case, the Court would not strike
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out the statement of claim and the Plaintiff is entitled to have his day
in Court to prove its claim.
6. Further it has also been held by the apex Court of the land that so long
as the statement of claim discloses a reasonable cause of action,
however weak the claim is, that claim cannot be struck off summarily
(see Bandar Builder Sdn Bhd v Unites Malayan Banking Corp,
Bhd (1993) 4 CLJ 7). The burden is on the Defendants here to show
to the Court that the claim is so plain and obviously unsustainable or
in other words, the Plaintiffs claim is bound to fail at trial. It is with the
above principles at the forefront of our minds that we considered this
appeal.
Background:
7. According to the Plaintiff, the circumstances leading to his legal action
are these. Bernas (the 3rd Defendant) was incorporated on 14 April
1994 by the Federal Government for the purpose of dealing with the
distribution of rice in the country.
8. On 11 July 1995, seven parties entered into a Shareholder Agreement
to form a joint venture company called Budaya Generasi Sdn Bhd (4th
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Defendant) to purchase the shares from the Federal Government in
the 3rd Defendant. This transaction was for the purpose of allowing the
4th Defendant to take over the liabilities and rights of the 3rd Defendant.
The seven shareholders and their shareholdings were as follows:
(a) Permatang Jaya Sdn Bhd (PJSB).. 38.89%
(b) Pertubuhan Peladang Kebangsaan (NAFAS).. 11.111%
(c) Persatuan Nelayan Kebangsaan (NEKMAT) 11.111%
(d) ZAW Ventures Sdn Bhd (ZAW) ..11.111%
(e) Simpletech Sdn Bhd (Simpletech) 11.111%
(f) Syarikat Perniagaan Peladang (MADA) Sdn Bhd (SPPM).
11.111 %
(g) Syarikat Perniagaan Peladang (KADA) Sdn Bhd
(SPPK)..5.555 %.
9. On 2 January 1996, a supplementary shareholders agreement was
entered into between the Plaintiff and the aforesaid 7 shareholders and
one Sebiro Holdings Sdn Bhd (Sebiro) in which both the Plaintiff and
Sebiro became 5% shareholders in the 4th Defendant, resulting in a
reduction of the shareholdings of ZAW and SSB.
10. It is not in dispute that the 3rd Defendant held a monopoly as the sole
importer of rice in Malaysia. And hence according to the Plaintiff, the
5% shareholding in the 4th Defendant was a valuable investment.
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11. However according to the Plaintiff, the worth of the Plaintiffs
shareholding in the 4th Defendant was rendered valueless when
through a series of corporate exercises involving the 1st Defendant,
the 2nd Defendant (Tradewinds (M) Bhd) and the 3rd Defendant in
2003, 2009 and 2013, the 4th Defendant ceased to hold any shares
in the 3rd Defendant and the 2nd Defendant became a shareholder in
the 3rd Defendant to the extent of 83% by 2013. By a novation
agreement in December 2009, the rice import business of the 4th
Defendant contained in the Privatisation Agreement with the
Government was novated to the 2nd Defendant. Through these series
of exercises, the Plaintiffs interest in the 4th Defendant according to
the Plaintiff became virtually valueless.
12. According to the Plaintiff, they were assured by the 1st Defendant in
2003 that when the corporate exercises first began that their value in
the 4th Defendant would not be rendered valueless. This is how the
Plaintiff said in paragraphs 21-22 of the statement of claim:
(a) SM had been instructed by the then Prime Minister of
Malaysia to assume control of Bernas to provide better
efficiency to its affairs and the entry of SM through the SM
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2003 Nominee would advance the commercial interest of all
shareholders of the Original Private Promoter (including the
Plaintiff).
(b) SM intended the investment in Bernas to be a long term
investment (which he desired to pursue with the Plaintiff) and
his plans would ensure significant benefit to the Plaintiff and
the adherence of the underlying objective of Bernas in terms
of the Privatization Agreement and Bernas Agreement.
(c) SM will conduct himself in a transparent manner in his future
dealings within the Original Private Promoter and Bernas so
as to allay concerns of the Plaintiff that there would be any
further activities undertaken in stealth.
(d) The shareholders agreement and the Supplemental
Shareholders Agreement will be honoured in its original form
and spirit.
13. It is the contention of the Plaintiff that the 1st Defendant breached the
above assurances which the Plaintiff in his statement of claim
describes as follows:
(a) The spirit of the pre-emption under the Shareholder
Agreement was again being breached by SM and SM 2003
nominee by essentially allowing control of Bernas to be again
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hived off to another remote nominee of SM namely
Tradewinds.
(b) The objective of the dividend in specie exercise that was
being formulated on a parallel basis with the 2009 General
Offer was such that the premium that was had by the Original
Private Promoter in Bernas was removed away from each of
the minority shareholders of the Original Private Promoter and
housed entirely with SM.
(c) The dividend in specie exercise was effected on or about
5.11.2009 through a positive controlling vote of
representatives of SM on the Board of the Original Private
Promoter without declaring their ultimate interest in the
exercise.
(d) The said dividend in specie exercise undermine the very
purpose and existence of the Original Private Promoter which
was then rendered dormant with no further business activity.
(e) The Bernas Agreement was subsequently novated to
Tradewinds without any formal; meeting of the Board or
shareholder of the Original Private Promoter.
Our grounds of decision:
14. In dealing with an application to strike out a statement of claim, the
Courts in our view must first assume the allegations of the Plaintiff
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to be true and then ask the question whether the allegations
disclose a reasonable cause of action. To recapitulate, the Plaintiff,
according to the submission of their counsel had pleaded two
causes of action:
(a) Oral assurances from the 1st Defendant that the Shareholders
Agreement and Supplemental Agreement thereto would be
honoured and that his entry into the 3rd Defendant would be
for the benefit of the Plaintiff.
(b) The 2009 2nd Defendants takeover of the 4th Defendant,
apart from being a breach of the assurances was unlawful in
the following respect:
(i) The dividend-in-specie exercise for the 2nd
Defendants takeover was undertaken in the Board
of the 4th Defendant without Gandingan Bersepadus
directors (5 out of 8) declaring their interest in the
exercise.
(ii) The 3rd Defendants Privatisation Agreement was
novated without formal approval of the Board and or
shareholders of the 4th Defendant.
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15. From a cursory look at the contents of the statement of claim, we
have no hesitation in concluding that they disclose a reasonable
cause or causes of action.
16. Having found that, we must then determine whether the aforesaid
causes of action can exist in light of the affidavit evidence before the
Court. The learned Judge premised her decision, in our view, mainly
on the following:
(a) That the Plaintiffs locus in filing this suit is suspect in
that the 1st Defendant, 2nd Defendant and 3rd Defendant were
not parties to the Shareholders Agreement and the
Supplementary Agreement.
(b) That the Plaintiff had surrendered its right to
challenge the privatization in view of the Deed of Waiver.
(c) That the Plaintiff had received a large dividend of
RM15 million pursuant to the privatization exercise.
(d) That to sustain the Plaintiffs claim would create
commercial chaos.
17. Reading the statement of claim and the affidavit evidence, one can
safely say that the Plaintiffs main complaint is simply the breach of
the oral assurances given by the 1st Defendant which is linked to
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the signing of the Deed of Waiver, a fact relied on by the learned
Judge. It is the contention of the Plaintiff that they only signed the
Deed of Waiver premised on the 1st Defendants oral assurances.
Now whether that is true or not, cannot, in our view be determined
by affidavit evidence. Oral evidence must be called and be
subjected to cross examination. Only in this manner can the Court
determine whether the allegations by the Plaintiff is true or not.
18. Further there appears to be some dispute as to whether the Plaintiff
did suffer any loss from the privatization exercise. The learned
Judge found that the Plaintiff had received RM15 million in cash
dividend which the Plaintiff denied receiving and referred the Court
to Tab 7 of the Core Bundle page 1870. This document shows that
the Plaintiff had only received a sum of RM252,775.00. This is a
major dispute of fact which again can only be resolved in a full trial.
19. It is also our view that the learned Judge may have misconstrued the
Plaintiffs locus to sue. The learned Judge questioned the Plaintiffs
right to sue under the Shareholders agreement and Supplementary
Shareholders Agreement when the 1st, 2nd and 3rd Defendants are
not party to those agreements. It is of course the Plaintiffs
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contention that it is not suing pursuant to those two agreements. Its
cause of action is premised on the oral assurances given by the 1st
Defendant. In our view this is an issue which should also be resolved
at the trial.
20. The Plaintiff needs only to show that there is a triable issue to the
Court and when shown the Court is duty bound to order a full trial.
From our analysis above, we have shown that there are disputes as
to the factual matrix leading to the privatization exercise. The
question of commercial chaos, with respect, cannot be a ground to
rely on to strike out a claim.
Conclusion:
21. The whole foundation of the Plaintiffs claim is the oral assurance of
the 1st Defendant. And when on the face of the evidence, it shows
that the Plaintiff did suffer substantial loss by the implementation of
the privatization exercise, can we say that there is no reasonable
cause of action? The answer for reasons stated above is in the
negative. It is not the duty of the Court at this stage of the
proceedings to delve into an arduous exercise of determining what
is alleged by the Plaintiff is true or not. That would be at the trial
stage.
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22. Accordingly we allowed the appeal with costs in the cause. We also
ordered that the deposit be refunded to the Appellant.
t.t Dated : 8th July 2015 (DAVID WONG DAK WAH)
Judge Court of Appeal Malaysia
For the Appellant : Cyrus Das with him Mohd Rizal Bahari Tetuan Bahari & Bahari
For the 1st Respondent : M. Pathmanathan with him Shanti Pathmanathan Tetuan M. Pathmanathan & Co. For the 2nd Respondent : Kalearasu Veloo Messrs SF Chan & Co.
For the 2nd Respondent : Eric Clement Messrs Abdul Halim Ushah & Associates
Notice: This copy of the Court's Reasons for Judgment is subject to
formal revision.
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