The court established that a company secretary does not owe fiduciary duties to individual shareholders, resulting in the dismissal of negligence claims brought by the plaintiffs.

[1] This action brought by the Plaintiff's above named against the Defendant was for inter alia, negligence, breach of fiduciary duty, breach of trust and malicious falsehood or Injurious falsehood. These causes of action were pleaded in the alternative.

B) Preliminaries

[2] The cause papers relevant to the trial were duly marked as follows:-

C) Pertinent Facts Giving Rise To The Institution Of The Causes Of Action

[3] On or around January 2004, one Khaw Tiew Chai, a shareholder and director of 3Q Resources (M) Sdn Bhd ("the Company"), invited the Plaintiffs and one Lee Chai Seng and one Law Ah Lean ("the said 2 persons") to join the Company as shareholders and directors with a view to, amongst others, giving financial aid to the Company for purchasing lands known as Lot Nos. 35, 44, 45, 48 and 2816 (held under Grant Nos. 5655, 5657, 5658, 5659 and 71105 respectively), Seksyen 1, Bandar Butterworth, Daerah Seberang Perai Utara, Pulau Pinang ("the Lands"). The Company entered into a Sale and Purchase Agreement dated 24 May 2004 to purchase the Lands at a price of RM27,962,829.00.

[4] It is the Plaintiff's contention that they together with the said 2 persons paid a total sum of RM2,796,283.00 on behalf of the Company as deposit for purchase of the Lands ("the purchase deposit"). The Plaintiff's contended that each of them paid a sum of RM294,628.00 as part of the purchase deposit.

[5] The Plaintiffs further state that Lee Chai Seng paid on behalf of the Company a sum of RM150,000.00 to the vendors of the Lands in order to obtain an extension of time to settle the balance purchase price. Therefore they state that the aggregate sum for the purchase deposit and the payment for obtaining the said time extension was RM2,946,283.00. The Lands were subsequently transferred to and registered in the name of the Company in or around May 2005.

[6] The 2nd Plaintiff and the said 2 persons were appointed as directors of the Company in May 2004, whereas the 1st Plaintiff was appointed a director in February 2005.

[7] All the 4 of them became shareholders of the Company in February 2005. The Plaintiffs each purchased 10,000 shares of the Company at a price of RM1.00 per share from Khaw Tiew Chai and so did Law Ah Lean. Lee Chai Seng purchased 49,998 shares from Khaw Tiew Chai and 2 shares from another shareholder of the Company, one Chen Mun Heng, each at a price of RM1.00 per share. Therefore the 4 of them purchased 80,000 shares of the Company in total. The 4 of them said they paid the entire share purchase consideration in cash to Khaw Tiew Chai.

[8] On or around May 2005, all the 4 of them and Khaw Tiew Chai, in their capacities as shareholders of the Company, agreed collectively that new shares of the Company be issued to all 5 of them according to their respective contributions to the total amount of both the purchase deposit and the payment for obtaining the said time extension, namely the sum of RM2,946,283.00 mentioned above.

[9] Meanwhile, Khaw Tiew Chai commenced Originating Summons No. 24-1537-2005 in the Penang High Court ("the OS") against the Plaintiffs and the said 2 persons, praying for amongst others, orders that the share certificates of the Company transferred to the 4 of them be cancelled, the issuance of the new shares of the Company to the Plaintiffs, the said 2 persons and Khaw Tiew Chai be cancelled, and that the Plaintiffs and the said 2 persons be removed as directors of the Company.

[10] The Defendant, who was the company secretary of 3Q, affirmed a statutory declaration ("SD") dated 17 October 2005 ("the Defendant's 17 October 2005 SD") to confirm amongst others that Khaw Tiew Chai had informed him that the entire consideration stated in the Forms 32A had been paid in full by the Plaintiffs and the said 2 persons to Khaw Tiew Chai and Chen Mun Heng before the Defendant transferred the 80,000 sh