Ht Maltec Consultants v Malaysian Resources Corporation Berhad, 05-02-2015

• Judge: WONG KIAN KHEONG
• Judgment Date: 05 February 2015
• Court: High Court (Malaysia)
• Record Number: 22NCC-311-08/2014

IN THE HIGH COURT OF MALAYA AT KUALA LUMPUR

(CIVIL DIVISION)

CUIT NO: 22NCC-311-08/2014

BETWEEN

HT MALTEC CONSULTANTS ... PLAINTIFF

AND

1 MALAYSIAN RESOURCES CORPORATION

BERHAD

2 MALAYSIAN RESOURCES DEVELOPMENT

SDN BHD

3 PERBADANAN KEMAJUAN NEGERI PERAK

4 STAR CAREER SDN BHD

5. DATO SAHRIL RIDZA BIN RIDZUAN

6. DATUK AHMAD ZAKI ZAHID

7. GANESAN A/L SUNDARAJ

8. SYUKRAN JEYA BIN ABDULLAH …DEFENDANTS

GROUNDS OF JUDGMENT

(Court enclosure nos. 10, 12, 14, 16 and 22)

1. Introduction

1. This case raises the question regarding the right of a partnership to

file a suit and whether such a right is barred or restricted by s 8 of the Registration of Businesses Act 1956 (RBA).

2. The plaintiff in this case (Plaintiff) is a partnership which has sued the following defendants:

(a) the first defendant company (1^st Defendant), a public listed company;

(b) the second defendant company (2^nd Defendant), a wholly owned subsidiary of the 1^st Defendant;

(c) the third defendant (3^rd Defendant), a statutory corporation established under the Perak State Development Corporation Enactment 1967;

(d) the fourth defendant company (4^th Defendant), a private limited company and a wholly owned subsidiary of the 3^rd Defendant;

(e) the fifth defendant (5^th Defendant), an individual who was the chairman of the 1^st Defendant’s board of directors at the material time;

(f) the sixth defendant (6^th Defendant), an individual who was the 1^st Defendant’s managing director at the material time; and

(g) the seventh (7^th Defendant) and eighth defendants (8^th Defendant) are individuals.

B. Nature of Plaintiff’s claim

3. In this suit (This Suit), the amended statement of claim (ASOC) pleads as follows:

(a) paragraph 10 – the 1^st Defendant requested the Plaintiff to prepare a technical proposal to be submitted by the 1^st Defendant to the Malaysian Government for the design, construction and operation of a new toll expressway between Ipoh and Lumut through Seri Iskandar (Highway Project);

(b) paragraph 11 – approval in principle was given by the Malaysian Government to the 1^st Defendant to carry out the Highway Project with the 3^rd Defendant;

(c) paragraph 12 – the 1^st and 3^rd Defendants entered into a joint venture with each other whereby –

(i) a private limited company, Kejuruteraan Dan Pembangunan Seri Lumut Sdn. Bhd. (KPSL) was incorporated;

(ii) KPSL would be appointed to carry out the Highway Project; and

(iii) the 1^st Defendant would control 70% shares in KPSL which would be held by the 2^nd Defendant and the 3^rd Defendant would control 30% shares in KPSL which would be held by the 4^th Defendant;

(d) paragraph 13 – a concession agreement was signed between KPSL and the Malaysian Government whereby the Malaysian Government appointed KPSL to design, construct, maintain, operate and manage the Ipoh-Lumut Expressway on a “build-operate and transfer” basis under a concession for a period of 35 years. The total cost of the Highway Project was projected to be RM1,194,552,325;

(e) paragraph 14 – a consultancy agreement was signed whereby KPSL appointed the Plaintiff as consultant for the Highway Project;

(f) paragraph 15 – disputes arose between the Plaintiff and KPSL over the payment of the Plaintiff’s professional fees (Fees) and on 22.12.2000, KPSL terminated the Plaintiff’s services;

(g) paragraphs 16 and 17 – the disputes between the Plaintiff and KPSL were referred to arbitration in 2003. On 27.8.2003, the arbitrator made an award in favour of the Plaintiff (Arbitral Award) wherein KPSL was ordered to pay the Plaintiff as follows –

(i) 75% of the Fees of RM19,318,796 less the sum of RM3,397,028.53 (which had been already paid);

(ii) RM417,200 as specific loss and damages suffered by the Plaintiff as a result of wrongful suspension and/or termination of the Plaintiff’s services; and

(iii) interest of 8% per annum on the above amounts from the date of the letter of termination of the Plaintiff’s services until full settlement;

(h) paragraphs 18 and 19 – the Plaintiff applied to the Kuala Lumpur High Court (KLHC) to recognise the Arbitral Award. On 27.8.2009, the KLHC recognised the Arbitral Award (KLHC’s Judgment);

(i) paragraphs 20 and 21 – on 18.9.2009, the 1^st Defendant made a general announcement to Bursa Malaysia that the 1^st Defendant’s subsidiary, the 2^nd Defendant, has entered into an agreement to dispose the 2^nd Defendant’s entire 70% equity interest in KPSL to the 7^th Defendant for the sum of RM70. Around the same time, the 3^rd Defendant also disposed the 3^rd Defendant’s entire 30% equity interest in KPSL to the 8^th Defendant for the sum of RM30;

(j) paragraphs 22, 23, 27 and 28 (Plaintiff’s Pleading on Lifting of Corporate Veil) – KPSL was at all times under the control and direction of the 1^st and 3^rd Defendants, in particular, the 1^st Defendant provided the directing mind and will for KPSL. Particulars of the 1^st Defendant’s control of KPSL have been pleaded;

(k) paragraphs 24 to 26 (Plaintiff’s Pleading on Tort of Conspiracy) – the 1^st to 8^th Defendants unlawfully and fraudulently conspired and agreed together to cheat and to defraud the Plaintiff and to prevent the Plaintiff from recovering the amounts due to the Plaintiff under the KLHC Judgment by way of execution, any other process for enforcement and/or recovery of KLHC Judgment (Conspiracy). The following particulars have been pleaded –

(i) particulars of fraud;

(ii) particulars of overt acts committed by the 1^st to 8^th Defendants pursuant to the Conspiracy; and

(iii) particulars of loss and damage suffered by the Plaintiff due to the Conspiracy, including particulars of special damages amounting to RM32,418,055.80; and

(l) paragraphs 24, 27 and 29 (Plaintiff’s Pleading on Fraud) - the Plaintiff pleads that it is in the interest of justice to lift KPSL’s corporate veil and to impose personal liability for damages for fraud directly against the 1^st to the 4^th Defendants and the 5^th and 6^th Defendants as directors of the 1^st Defendant. The Plaintiff prays for, among others, a declaration that the disposal of the entire shareholding of KPSL to the 7^th and 8^th Defendants for a nominal sum of RM100 was a fraud and the 1^st to 4^th Defendants should be liable to the Plaintiff for the satisfaction of the KLHC Judgment.

C. Applications by 1^st to 6^th Defendants

4. This judgment concerns the following applications (These Applications):

(a) 4 notices of application filed by the 1^st, 2^nd, 5^th and 6^th Defendants in Court enclosure nos.10, 12, 14 and 16 respectively to -

(i) strike out the writ of summons (Writ) and the ASOC in this case; and

(ii) dismiss This Suit

- against the 1^st, 2^nd, 5^th and 6^th Defendants pursuant to Order 18 rule 19(1)(a), (b) and/or (d) of the Rules of Court 2012 (RC) and/or the court’s inherent jurisdiction; and

(b) 1 notice of application in Court enclosure no.22 filed by the 3^rd and 4^th Defendants to strike out the Writ and ASOC against the 3^rd and 4^th Defendants pursuant to Order 18 rule 19(1)(a), (b) and/or (d) RC and/or the court’s inherent jurisdiction under Order 92 rule 4 RC.

D. One striking out application suffices

5. Before I discuss the merits of These Applications, the 1^st, 2^nd, 5^th and 6^th Defendants are represented by the same firm of solicitors but 4 separate striking out applications have been filed for each of the 1^st, 2^nd, 5^th and 6^th Defendants.

6. I do not think it is necessary or desirable for the 1^st, 2^nd, 5^th and 6^th Defendants to file 4 separate striking out applications –

(a) when these 4 applications applied for the same orders based on the same grounds;

(b) the 1^st, 2^nd, 5^th and 6^th Defendants are represented by the same solicitors;

(c) suffices for the 1^st, 2^nd, 5^th and 6^th Defendants to file one striking out application so as to save time, effort and costs; and

(d) if separate striking out applications are filed, there may be a possibility that these applications may be heard separately which will further delay the disposal of the suit in question.

E. Submissions by 1^st to 6^th Defendants

7. The 1^st, 2^nd, 5^th and 6^th Defendants forwarded the following grounds in support of their striking out applications:

(a) the Plaintiff has no locus standi to file This Suit as the KLHC’s Judgment has been obtained on 27.8.2009 when the Plaintiff’s business registration under RBA has expired on 27.11.2008; and

(b) the ASOC does not disclose a reasonable cause of action because –

(i) KPSL is a legal entity which is separate from KPSL’s holding company, the 2^nd Defendant;

(ii) the 2^nd Defendant as a shareholder in KPSL has no legal obligation to pay KPSL’s debts due to the Plaintiff. Nor does the 1^st Defendant have any legal obligation to pay KPSL’s debts due to the Plaintiff;

(iii) the Plaintiff cannot lift KPSL’s corporate veil as the Plaintiff has not pleaded that the 1^st Defendant has used KPSL as a sham, façade and an instrument of fraud;

(iv) the Plaintiff has no cause of action against the 1^st, 2^nd, 5^th and 6^th Defendants for the tort of conspiracy as the sale of the 2^nd Defendant’s shares in KPSL to the 7^th Defendant has not caused any damage to the Plaintiff;

(v) the Plaintiff has no cause of action...