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2021 MarsdenLR 1158
HIGH COURT MALAYA KUALA LUMPUR
ATALIAN HOLDINGS (MALAYSIA) SDN BHD – Appellant
Versus
RADZALI HASSAN – Respondent
[Suit No: WA-22NCC-349-08/2020]
A vague and imprecise allegation against a non-legal entity does not constitute a sustainable cause of action in court.
Headnote:(A) Rules of Court 2012 – Order 18 Rule 19 – Striking out applications – Counterclaim against 9 Defendants was dismissed as lacking a reasonable cause of action. The allegation against 'Atalian Group' was deemed vague and not legally tenable. The Counterclaim failed to identify specific entities responsible for breach or fraud. (Paras 1-44)
Facts of the case: The Plaintiff claimed breach of a sale agreement regarding shares in Harta Maintenance Sdn Bhd. Defendants counterclaimed without a valid legal entity for the ‘Atalian Group’.
Findings of Court: The Counterclaim was struck out for failing to disclose a reasonable cause of action.
Issues: Whether the Counterclaim pleads sufficient facts to sustain legal actions against the Defendants.
Ratio Decidendi: The court stressed that vague complaints against non-legal entities do not sustain a cause of action.
Result: Applications to strike out the Counterclaim were allowed.
JUDGMENT
[1] There are nine applications before the Court - Enclosure ("Encl") 19 to 27 (inclusive) made on 20 November 2020 by each of the 9 Defendants in the Counterclaim pursuant to O 18 r 19 (1) (a) Rules of 2012 ("ROC 2012") to strike out the action by Counterclaim against them.
[2] On 20 January 2021, I dismissed encl 19 with costs but allowed encl 20 to 27 with costs.
[3] As the matters were related and heard together, it is convenient to set out the grounds for allowing encl 19 to 27 in one judgment.
Background
[4] Harta Maintenance Sdn Bhd, (interchangeably "the Company" or "Harta") a private limited company incorporated in Malaysia carries on the principal business of contractual cleaning and maintenance of offices and buildings for customers.
[5] Atalian Asia Holding Limited ("Atalian Asia") issued a Letter of Intent dated 10 June 2014 to the Defendant ("Radzali") and his nominees Datin Salmah M Rahimah Shah ("Salmah") and Mimi Azurah binti Zainal ("Mimi") The Letter of Intent interalia stated:
5.1 Atalian Asia was interested in acquiring, directly or through an assigned party, the shares of the Company and its subsidiaries from the Defendant and his nominees;
5.2 The acquisition was part of the strategic plan of the Atalian Group to develop facility management and cleaning services with the target of being one of the leaders in South East Asia;
5.3 The acquisition would consist of the initial acquisition of 70% of the shares of the Company, and thereafter the acquisition of the remaining 30% of the shares of the Company through put and call option agreements with the holding company of the Atalian Group, Atalian Holding Development and Strategy SA ("AHDS");
5.4 The Defendant would continue managing the business of the Company for at least 5 years as the Company's Chief Executive Officer, thus ensuring the growth of the Company.
[6] The Plaintiff (interchangeably referred herein as "Atalian Malaysia") pursuant to the Letter of Intent entered into a sale and purchase agreement dated 6 November 2014 ("SPA") with Radzali, Salmah and Mimi. The SPA interalia stated as follows:
6.1 The Plaintiff purchased 70% of the shares of the Company ("70% Shares") held by the Defendant (22%), Salmah (24%) and Mimi (24%) (Article 5.1);
6.2 The Defendant agreed to sell the remaining 30% of the shares of the Company in tranches to AHDS through a separate agreement (Article 7);
6.3 The Defendant agreed to continue managing the Company as its Chief Executive Officer until 30 June 2017, with an option of an extension until 30 June 2019, to ensure the continuity and growth of the Company's business (Article 6.11).
[7] The Plaintiff claimed that it has paid Radzali a sum of RM43,144,926 for the 70% shares but todate, these shares have not been transferred to the Plaintiff.
[8] On the same date as the SPA, AHDS and Radzali also entered into a Call Option Agreement and another Put Option Agreement providing for sale of the balance 30% shares in the Company exercisable on the dates as provided.
8.1 Pursuant to an Amendment Agreement dated 15 August 2018 to the Put and Call Option Agreements between AHDS and the Defendant ("Amendment Agreement"), the following transpired:
8.1.1 AHDS assigned its rights and obligations in relation to the option to purchase the 15% Shares to the Plaintiff (Article 1.4);
8.1.2 The Plaintiff exercised the said option to purchase the 15% Shares from the Defendant (Article 1.4);
8.1.3 The option for the Balance 15% Shares would be exercisable by 30 June 2020 (Article 1.5).
8.2 The Plaintiff thereafter paid RM12,998,425 to the Defendant on 19 June 2018 for the purchase of the 15% Shares.
8.3 To date, the transfer of the 15% Shares to the Plaintiff has not been effected.
[9] By a letter dated 29 June 2020 issued by the Plaintiff and AHDS to the Defendant, AHDS assigned all its rights and obligations in relation to the option to purchase the Balance 15% Shares to the Plaintiff and the Plaintiff exercised the said option t
