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2021 MarsdenLR 1991
HIGH COURT MALAYA SHAH ALAM
P PUVANAGUROO PARAMAKUROO & ORS – Appellant
Versus
IMPIAN SELAMA COMMUNICATION AND SERVICES SDN BHD & ORS (ENCLS 46 .... – Respondent
[Suit No: BA-22ANCvC-743-12/2017]
The court underscored the necessity of document discovery for substantiating claims of profit loss, and affirmed that a sufficient cause of action existed against the Fourth Defendant, thereby dismissing its application to strike out.
Headnote:(A) Rules of 2012 – Order 24 r 7 – Order for discovery of documents sought by the First, Second, and Fourth Plaintiffs granted. The Plaintiffs need documents to substantiate their claim of loss of profits under a Shareholder's Agreement due to alleged breaches by the Defendants. (Paras 1, 9, 21, 30)
(B) Order 18 r 19 – Application to strike out the Writ and Statement of Claim by the Fourth Defendant dismissed. The Court found that sufficient cause of action exists against the Fourth Defendant based on their involvement in the company's affairs. (Paras 32, 44)
Facts of the case: The Plaintiffs are seeking declaratory relief and discovery related to their alleged breaches by the Defendants concerning a Shareholder's Agreement. They assert that the Defendants failed to declare dividends and maintain transparency over financial records. (Paras 3-8)
Findings of Court: The Court allowed the Plaintiffs' application for discovery and dismissed the Fourth Defendant's motion to strike out, confirming there was a sufficient basis for the Plaintiffs' claims. (Paras 31, 48)
Issues: The main issues included the entitlement to the requested documents to substantiate claims of profit loss and the potential meritorious claims against the Fourth Defendant. (Paras 13, 35)
Ratio Decidendi: The Court emphasized the necessity of relevant documents for properly adjudicating claims of profit deprivation and ruled that dismissal of the Fourth Defendant's application was appropriate given the established cause of action. (Paras 19, 41)
Result: Plaintiffs' application granted; Fourth Defendant's application dismissed.
JUDGMENT
Introduction
[1] In this case, there were two interlocutory applications:
i. Application by the First, Second and Fourth Plaintiffs dated 19 August 2019 for an order of discovery pursuant to O 24 r 7 of the Rules of 2012 to obtain specific listed documents from the Defendants (Encl 46); and
ii. Application by the Fourth Defendant to strike out the Writ and Statement of Claim dated 27 September 2017 pursuant to O 18, r 19 (1)(a),(b),(c) and/or (d) of the Rules of 2012 (Encl 51).
[2] I have allowed the First, Second and Fourth Plaintiffs' application for discovery of documents and dismissed the Fourth Defendant's application to strike out the Writ and Statement of Claim and below are reasons for my decisions.
Salient Facts
[3] Plaintiffs' suit against Defendants is essentially for declaratory relief, discovery of documents and damages. Plaintiffs are seeking inter alia:
a) Deklarasi bahawa Defendan-Defendan Pertama, Kedua dan Ketiga telah mengingkari Perjanjian bertarikh 16 Mac 2016;
b) Deklarasi bahawa Perjanjian bertarikh 16 Mac 2016 adalah dinggap telah ditamatkan pada tempoh 31 Julai 2017;
c) Satu deklarasi bahawa Plaintif-Plaintif Pertama, Kedua dan Ketiga berhak kepada keuntungan berkenaan dengan klien-klien/perniagaan yang telah diperkenalkan kepada Defendan Pertama;
d) Satu Perintah bahawa Defendan-Defendan Pertama, Kedua dan Ketiga mengemukakan kepada Plaintif-Plaintif dokumen-dokumen berikut dalam tempoh 14 hari dari tarikh perintah dokumen i-ix (Rujuk Writ Saman Plaintif-Plaintif)...
[4] Around July 2013, The First and Second Plaintiffs, individuals who are experts and experienced in the field of communication and rail business were invited by the Second Defendant and a person by the name of Mohd Fauzi bin Ismail (Third Defendant's husband) to join in the business of First Defendant, a company, on a profit-sharing basis. Third Plaintiff was also invited to promote and bring business for the First Defendant. Plaintiffs' obligations are mainly to introduce new clients to the First Defendant.
[5] Plaintiffs have rendered their services to set up the company profile and introduced numerous customers to the Defendant since July 2013. The First, Second and Third Plaintiffs were paid a monthly allowance by the First Defendant for all works carried out. As profit-partners, the Plaintiffs were also promised payment of dividends declared on sharing basis ie 30% to the First and Second Plaintiffs and 10% to the Third Plaintiff.
[6] The First Defendant, through the Second Defendant who was the managing director, failed to adhere and/or comply with the oral promise to the First, Second and Third Plaintiffs by failing to declare dividends, provide copies of accounts and financial records or details of profits generated from all businesses introduced by Plaintiffs. At all material times, the Plaintiffs were kept in the dark and not given access to all accounting documents of the First Defendant.
[7] Subsequently, upon the insistence of the First and Second Plaintiffs, a Shareholder's Agreement dated 25 March 2016 was executed between the Fourth and Fifth Plaintiffs of one part and the Second and Third Defendants of the other part ("Shareholder's Agreement"). The Fourth and Fifth Plaintiffs were special vehicle companies (SPV) set up for purposes of the First and Second Plaintiffs. This Shareholder's Agreement crystallises the prior oral agreement between the parties.
[8] At the outset, the Agreement provides terms as follows:
i) Recital C - "Whereas the Third Party (Fifth Plaintiff) and Fourth Party (Fourth Plaintiff) are profit partners that provide business for the Company (First Defendant);
ii) Recital E - "It is the intention of the parties hereto to participate in the business of the Company inter alia to undertake and carry out the consulting, manufacturing and marketing of telecommunications, rail works related projects and steel fabrication related works from private, semi government and government related agencie
