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2021 MarsdenLR 2688
HIGH COURT MALAYA TAIPING
KHADRI KHALID – Appellant
Versus
CTOS DATA SYSTEMS SDN BHD & ANOR – Respondent
[Suit No: AB-23NCVC-1-02/2020]
A company is a separate legal entity, thus a director cannot sue for statements made solely regarding the company.
Headnote:(A) Defamation – Plaintiff is a director cum shareholder of Dagangan Rakyat Sdn Bhd (DRSB) and claims defamation due to trade reference published by Second Defendant in respect of DRSB – Court finds plaintiff cannot sue in personal capacity as impugned statement pertains only to DRSB, a separate legal entity – Cited principles from Saloman v. A Saloman & Co Ltd [1897] AC 22 concerning separate legal identity of companies – Thus, properly the DRSB could bring any action, not the individual plaintiff. (Paras 12-15)
Facts of the Case:
Plaintiff claims for damages due to a trade reference made about DRSB which led to his inability to open a bank account or obtain loans. The trade reference concerned a debt acknowledged by DRSB, but the plaintiff did not owe any debts personally. (Paras 6-7)
Findings of Court:
Action is struck out as the claim lacks locus standi since it was not aimed at the plaintiff personally. (Paras 18-19)
Issues: The central issue was whether the plaintiff was entitled to sue in defamation for a claim related solely to the company DRSB.
Ratio Decidendi: The court reiterated the principle that a company is a separate legal entity hence its shareholders/directors, such as the plaintiff, do not bear personal liabilities nor can they sue for company matters in their individual capacity. (Paras 15, 18)
Result: Writ of Summons and Statement of Claim struck out. Costs awarded. (Para 20)
JUDGMENT
Description Of Parties
[1] The plaintiff to this Writ action is Dato' Haji Khadri bin Khalid. He is a company director, businessman and politician. He and two others are directors of Dagangan Rakyat Sdn Bhd (DRSB). The other two directors are Masitah bte Khadri and Datin Hajah Roslaily binti Ibrahim. Both the plaintiff and Datin Hajah Roslaily binti Ibrahim are directors cum shareholder of DRSB.
[2] There are two defendants to the suit. Both are corporations incorporated under the Companies Act 1965 . The First Defendant is CTOS Data Systems Sdn Bhd (CTOS) and the Second Defendant is Maju Tumbuh Sdn Bhd (MTSB).
Nature Of Claim By Plaintiff
[3] The claim by plaintiff is for general, aggravated damages with interest and costs as he pleads he has been defamed because of publication of a trade reference which was made by MTSB in respect of DRSB.
[4] The plaintiff has commenced this suit in his personal capacity as a director cum shareholder of DRSB. It was further amplified in his statement of claim (SOC) that he was defamed by both the defendants as an individual, company director, businessman as well as a politician.
[5] The trade reference is in fact made by MTSB in respect of DRSB only and not the plaintiff as an individual. There was no reference made in the trade reference in respect of the plaintiff in his personal capacity. Thus, the trade reference which is subject matter of the Writ action is by the second defendant MTSB against DRSB and not against any other person or entity. (See MyCTOS Report referred to in para 6 of plaintiff's SOC).
[6] Essentially, the trade reference refers to a debt owed by DRSB to MTSB to a tune of RM45,000 which was due and owing for 180 days as at date of publication of the CTOS Report on 29 April 2016.
[7] The proverbial straw that broke the camel's back is that as a result of publication of CTOS report by the first defendant CTOS, the plaintiff as an individual was unable to open a current account and obtain a loan facility from CIMB Bank at Taiping (see para 4 SOC). This too had happened to one Masitah binti Khadri who was unable to open a company account at CIMB Bank and obtain a loan facility from RHB Bank. Reference is made to a statutory declaration sworn by Masitah binti Khadri referred to in the affidavit in reply filed by plaintiff to oppose application by both defendants to strike out his Writ and SOC under O 18 r 19 of the Rules of 2012 (ROC) (see exhibit KK3 dated 3 June 2020 to the said affidavit in reply dated 4 June 2020). Her statutory declaration is an irrelevant consideration to this application under O 18 r 19 ROC against the plaintiff, simply because she is not a party to the Writ action pursued by the plaintiff.
[8] CTOS, the first defendant is a reporting agency duly licensed pursuant to provisions of the Credit Reporting Agencies Act 2010 (Act 710). It conducts its business and affairs in accordance with the provisions of Act 710. Act 710 enables the first defendant to furnish, release and/or publish credit reports to subscribers whom may include financial institutions, including CIMB Bank. Likewise, financial institutions, like CIMB Bank, who receive and consider application for credit or loan facility may request for credit reports from the first defendant with the consent of the applicant for the loan facility. Thus, any publication of credit report is made in good faith and in compliance with provisions of Act 710. Further, publication of the trade reference in the CTOS report is on information furnished by MTSB, the second defendant. Information on DRSB is available in the public domain from the records of Company Commission Malaysia (CCM, SSM - the Malay equivalent)
[9] It is the second defendant MTSB's contention, that the plaintiff's name appeared in the MyCTOS report because the report shows the factual relationship between plaintiff and DRSB, as being its director and shareholder. It is stated not because the plaintiff personally owes MTSB
