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2021 MarsdenLR 2000
HIGH COURT MALAYA KUALA LUMPUR
ITRAMAS TECHNOLOGY SDN BHD – Appellant
Versus
MAJU HOLDINGS SDN BHD & ORS (ENCL 65) – Respondent
[Suit No: WA-22NCC-245-06/2020]
A plaintiff's claim for breach of contract against a holding company fails when contractual obligations are explicitly assigned to a subsidiary, and the lifting of the corporate veil requires demonstrating fraud or similar impropriety.
Headnote:(A) Rules of Court, 2012 – Order 18 Rule 19 – Corporate Veil – The Plaintiff's claim against the 1st Defendant was dismissed for lack of basis, as it sought payment under a contract which expressly obligated the 2nd Defendant. The claim for lifting the corporate veil was deemed unfounded as no fraud or impropriety was established. (Paras 97, 100)
(B) Breach of Contract – The Plaintiff's assertion of breach by the 1st Defendant was rejected since contractual obligations were explicitly assigned to the 2nd Defendant. Interpretation of contracts must be unambiguous and adhere to the expressed intent of the parties. (Paras 57, 58)
(C) Lifting of Corporate Veil – The court held that, absent fraud or inequitable conduct, the corporate veil cannot be lifted merely due to shareholder relations. A clear underlying cause of action is required to justify this remedy. (Paras 61, 68)
(D) The Plaintiff failed to establish any reasonable cause of action against the 1st Defendant, whose obligation under the First Agreement was clearly delineated to the 2nd Defendant. Consequently, the application was allowed with costs awarded to the 1st Defendant. (Paras 100, 101)
(Enclosure 65)
[1] This was the 1st Defendant's application pursuant to O 18 r 19(1)(a) and/or (b) and/or (c) and/or (d) and/or O 15 r 6(2) of the Rules of , 2012 and/or the inherent jurisdiction of the Court to essentially strike out the Plaintiff's Statement of Claim dated 17 June 2020 as against the 1st Defendant or further and/or in the alternative that the 1st Defendant cease to be a party to this action ("this Application").
Salient Background Facts
[2] The Plaintiff's main claim in this action is against the 1st and 2nd Defendants and based on the Plaintiff's pleaded case these claims can be divided to two main parts which are summarised as follows:
i) Payment of the sum of RM1,782,000.00 as against the 1st Defendant and/or 2nd Defendant arising from a loan which the Plaintiff claims was requested by the 1st and 2nd Defendants as evidenced by an agreement entered into between the Plaintiff, the 1st Defendant dan the 2nd Defendant on 15 November 2019 ("First Agreement"); and
ii) Payment of the sum of RM2,000,000.00 (RM2 million) that is held in a Fixed Deposit Account in the 4th Defendant's bank which the Plaintiff claims was a loan given by the Plaintiff to the 2nd Defendant ("Second Agreement").
[3] Apart from its relief on interests and costs the Plaintiff claim against the 1st Defendant is substantially only in respect of the First Agreement and for the sum of RM1,782,000.00.
[4] Therefore, the facts pertaining to the Plaintiff's claim against the other Defendants are not material for the purpose of this Application.
[5] The 1st Defendant is the holding company of Maju Solar Sdn Bhd ("MSSB"). The 2nd Defendant is a subsidiary of MSSB.
[6] By way of a Letter of Award dated 23 April 2018 ("Letter of Award"), the 2nd Defendant was granted by the Energy Commission of Malaysia ("Energy Commission") a project known as "The Development of Large Scale Solar PV (LSSPV) Plant Of 9.90Mwa.c. at Gurun, Kedah" ("the Project").
[7] Thereafter, by way of the Engineering, Procurement, Construction and Commissioning Contract Agreement dated 1 June 2019 ("EPCC Contract") entered between the Plaintiff and the 2nd Defendant, the Plaintiff was appointed as the EPCC Contractor.
[8] The connection between the parties can thus be summarised as follows:
i) The 1st Defendant (the holding company);
ii) MSSB (the subsidiary of the 1st Defendant and is not a party to this action);
iii) The 2nd Defendant (sub-subsidiary of the 1st Defendant); and
iv) The Plaintiff (as the EPCC Contractor appointed by the 2nd Defendant).
[9] Pursuant to cl 5 of the Letter of Award, the 2nd Defendant was required to substitute its Bid Bond with a Substitute Bond of RM5,000,000.00 ("Substitute Bond").
[10] Cl 5 of the Letter of Award further provides that the Substitute Bond would be returned by the Energy Commission after, inter alia, the issuance of a bank guarantee to the Electricity Utility Company which was to be identified later.
[11] In connection to this, the 2nd Defendant procured from the 1st Defendant the Substitute Bond which was then given to the Energy Commission.
[12] Pursuant to cl 7.2 of the EPCC Contract, the Plaintiff agreed to provide a performance bond by way of bank guarantee in the sum of RM1,782,000.00 in favour of Tenaga Nasional Berhad ("TNB") ("TNB Bank Guarantee") on behalf of the 2nd Defendant. This would serve as the bank guarantee as stated in para 10 above. Cls 7.2, 7.2.1 to 7.2.3 of the EPCC Contract provides as follows:
7.2.1 The Owner is contractually obligated under the PPA Agreement to provide a Performance.. Bond of Ringgit Malaysia One Million Seven Hundred Eighty-Two Thousand (RM1,782,000.00) issued by a First- class bank to TNB. for the purpose of security of due performance under the PPA Agreement. The Owner has requested for for financial assistance from the EPCC Contractor to provide this Performance Bond on behalf and benefit of the Owner directly to TNB and EPCC Contractor has agreed to provide this Per
