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2025 MarsdenLR 2096
HIGH COURT MALAYA KUALA LUMPUR
LIEW MOONG JU – Appellant
Versus
PENINSULAR STEEL GALVANISING SDN BHD & ORS – Respondent
[Originating Summons No: WA-24NCC-194-04/2024]
The court has discretion to convert an originating summons to a writ when substantial factual contradictions exist, particularly in cases alleging oppression and fraud.
Headnote:(A) Companies Act 2016 - Section 346 - Application for conversion of originating summons to writ - Plaintiff, a minority shareholder, alleges oppression by majority shareholders - Court has discretion under O 28 r 8(1) ROC 2012 to convert OS to writ if substantial grounds of contradiction exist - Plaintiff's need for trial supported by allegations of fraud and conflicting affidavit evidence - Defendants' objections dismissed. (Paras 7, 9, 11, 27, 50)
(B) Oppression of minority shareholders - Conduct of majority shareholders must not disregard the interests of minority shareholders - Mismanagement alone does not constitute oppression. (Paras 26, 28)
Facts of the case:
The plaintiff holds 35% shares in PSG, alleging that the 2nd and 3rd defendants, as majority shareholders, are conducting affairs oppressively and unfairly prejudicially to him. The plaintiff seeks to convert his originating summons to a writ for a trial due to disputed facts and the need for witness testimonies. (Paras 1-4, 11-14)
Findings of Court:
The court allowed the plaintiff's application to convert the OS to a writ, emphasizing the need for a trial to resolve factual disputes and the presence of allegations of fraud. (Paras 9, 50)
Issues: The main issues addressed include whether the plaintiff's allegations constitute oppression and whether a trial is necessary to resolve factual disputes. (Paras 26, 27)
Ratio Decidendi: The court ruled that the presence of conflicting affidavit evidence and allegations of fraud necessitate a trial, and the plaintiff's application for conversion was justified. (Paras 7, 50)
Result: Application allowed.
JUDGMENT
Application to proceed with oppression Originating Summons as if begun by way of a Writ]
Introduction
[1] The plaintiff holds a 35% share in Peninsular Steel Galvanising Sdn Bhd ("PSG"), the first defendant in this case. The second defendant [Ng Kong Chen @ Ng Ting Miew (NRIC No.: 490325-10-5455) and the third defendant [Ng Jinn Yeong (NRIC No.: 810326-14-5547] are directors of PSG, with the second defendant owning 55% of the shares and the third defendant owning 10% of the shares in PSG.
[2] The plaintiff has filed an Originating Summons dated 23 April 2024 in encl 1 ("OS") against the 2nd and 3rd defendants seeking a remedy premised on s 346 of the Companies Act 2016 [" CA 2016"] on the ground:
i. that the affairs of PSG are being conducted or the powers of the directors are being exercised in a manner oppressive to him as a member;
ii. or in disregard of his interests as a member.
[3] Affidavits were filed by the parties. Subsequently, the plaintiff filed an application in encl 13 dated 3 October 2024 under O 28 r 8(1) Rules of 2012 ["ROC 2012"] to proceed with the OS as if it was begun by way of a Writ. This is opposed by the defendants.
Plaintiff's Contentions
[4] The plaintiff contends it cannot proceed with the OS format but needs a conversion to a writ as a trial is required because:
i. the defendants deny there is oppression;
ii. there are factual allegations made by the plaintiff which are denied by the defendants; and
iii. the plaintiff needs to subpoena witnesses to testify on disputed facts.
[See Enclosure 21 plaintiff's written submissions at para 3]
Defendants' Contentions
[5] The defendants contend a trial is not needed because "if there is any conflict of facts, which the plaintiff has failed to prove, the plaintiff could resort to the process under O 28 r 4 ROC 2012 to cross-examine the 2nd and 3rd defendants", unquote. [See encl 19 defendants' written submissions at para 18].
[6] The defendants also contend a trial is not needed because:
i. It is mandatory under O 88 Rules of 2012 for an action under s 346 CA 2016 to be commenced by way of an OS;
ii. Issues raised are irrelevant to oppression and do not in any way prove that the plaintiff's rights as a shareholder have been affected. It is trite law that mismanagement of the company, if any, do not amount to oppression;
iii. The plaintiff is embarking on a fishing expedition via a trial; and
iv. The plaintiff offered no explanation why the 2nd and 3rd defendants could not be cross-examined on the affidavits.
[See Enclosure 19 defendants' written submissions at para 5]
Law On Conversion Of OS To writ
[7] Where the facts are contradicted on substantial grounds, the Court has the discretion under O 28 r 8(1) ROC 2012 to order that the proceedings be continued as if the cause or matter had been begun by writ.
[See Malaysian Civil Procedure 2024 Volume 1 Sweet and Maxwell at 28/8/1 and 88/2/4, Ting Ling Kiew & Anor v. Tang Eng Iron Works Co Ltd; [1992] 2 MLJ 217; [1992] 1 CLJ (Rep) 331; [1992] 1 AMR 90 SC ["Ting Ling Kiew"] and Khoo Kheng Sim v. Khoo Chooi Leong & Anor; [2002] 5 MLJ 345, HC ["Khoo Kheng Sim"]].
[8] The plaintiff may by his own accord make such an application for conversion. However, the Court may dismiss the conversion application where documentary evidence is sufficient to address the issues arising.
[See Malaysian Civil Procedure 2024 Volume 1 Sweet and Maxwell at 28/8/1 and 88/2/4, Ho Yaw Ming v. Ho Yau Hong & Ors (Encl 29), HC ["Ho Yaw Ming"]; Lee Quan Yoong v. Koh Heng Jin Holdings Sdn Bhd & Ors (Encl 6 & 8), HC ["Lee Quan Yoong"]].
Outcome
[9] I heard counsel and allowed the plaintiff's application on 9 January 2025 with costs in the cause. The defendants are unhappy and have appealed to the Court of Appeal on 27 January 2025.
[10] These are my Grounds of Judgment. For the purposes of this Judgment, the term "oppression", when used in isolation by me, is used as a short form to refer to the entire range of conduct prohibited by s 3
