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2022 MarsdenLR 516
HIGH COURT MALAYA KUALA LUMPUR
CHUAH SEONG KEAT & ORS – Appellant
Versus
DIN TAN YONG CHIA & ORS (NO 4) – Respondent
[Originating Summons No: WA-24NCC-559-12/2020]
The court held that minority shareholders' oppression claims must demonstrate distinct personal injury, not mere dissatisfaction or managerial disagreement, especially against statutory provisions governing corporate hierarchy.
Headnote:(A) Companies Act 2016 – Section 346 – Minority shareholders oppression – Plaintiffs claimed oppression by majority shareholders leading to their exclusion from management and control of Thai Odyssey Group – Court found no evidence to uphold claims of breach of legitimate expectation or oppressive conduct. (Paras 1, 37-38, 70, 118)
(B)
Change in shareholdings and management control – Significant alterations occurred in 2010 diluting Plaintiffs’ shareholding and management authority, which invalidated claims of legitimate expectation. (Paras 51-62)
(C)
Mismanagement complaints – Plaintiffs failed to demonstrate distinct personal losses or oppressive conduct beyond managerial disagreements, diluting their claims under s 346 of the CA 2016. (Paras 98-107)
(D)
Plaintiff’s application to convert Originating Summons to Writ denied – Court found the existing framework sufficient to address the claims. (Para 118)
Yes, based on the provided document, the court dismissed the minority oppression claim. The court found that the Plaintiffs failed to establish the existence of a legitimate expectation or understanding that they would retain control over the management of the Thai Odyssey Group. The court emphasized that management control had been lawfully changed through the relevant agreements and that no evidence supported the existence of an enforceable understanding or expectation beyond the formal contractual arrangements. Additionally, the court noted that the Plaintiffs' complaints regarding mismanagement, dilution of shares, and breakdown of trust did not meet the criteria for oppression, as they did not demonstrate a distinct personal injury or unfair prejudice. Consequently, the court dismissed the originating summons and the application to convert it into a Writ action.
JUDGMENT
(No 4)
(In Respect Of Enclosures 1 And 110)
Introduction
[1] Enclosure 1 is an action for minority shareholders' oppression filed under s 346 of the Companies Act 2016 ('the CA 2016').
[2] Prior to the hearing of encl 1, the Plaintiffs filed encl 110 to convert the Originating Summons under encl 1 into a Writ action. The Plaintiffs contended that there are pertinent issues of facts to warrant calling of third-party witnesses who have personal knowledge of the matters but are not parties and have not filed any affidavits in this action.
[3] Enclosure 110 was heard on 13 September 2021, after the parties had completed exchange of affidavits and written submissions. However, I made no decision or determination after the hearing, preferring instead to re-visit the application after the lodgement of the parties' respective written submissions on encl 1. Although I was inclined to dismiss encl 110 at that time, nevertheless, I wanted the opportunity to read the parties' respective written submissions on the main action to satisfy myself that the loss of opportunity for the Plaintiffs to call third party witnesses would not prejudice my determination of the issues in encl 1.
[4] As it turned out, at the hearing of encl 1, learned counsel for the Plaintiffs informed this Court that the Plaintiffs' position remained that encl 1 can only be properly determined if this action is converted to a Writ action and invited this Court to consider the merits of encl 110 and to decide on the same.
[5] With the benefits of the parties' written submissions on encl 1 (in addition to their submissions on encl 110), I remain convinced that this is indeed not a suitable case for the Originating Summons to be converted into a Writ action. The reason for my decision on encl 110 will be clear from the grounds of judgment below dismissing encl 1 with costs.
Abbreviations
[6] For further ease of reference, the following abbreviations are used in this judgment:
a. As to the relevant parties, litigants and their corporate representatives:
b. As to the relevant material events or matters:
c. As to the relevant agreements entered into between the individuals and entities referred to above:
d. As to the relevant legal proceedings:
Summary Of The Action
[7] By this Originating Summons, Leon (P1) and 3 other Plaintiffs above claimed that they are being oppressed as minority shareholders of Thai Odyssey Group which business is operated primarily through D7(TOSB), D9(TOGSB) and D14 (SOVB).
[8] Leon was the principal founder of the Thai Odyssey business and was in charge of the management and operations of the Thai Odyssey business for 17 years (together with P2 and P3) until their cessation as directors of the companies.
[9] In essence, the disputes between the parties centred around the allegations that the Individual Defendants:
a. have and are conducting the affairs of Thai Odyssey Group in a manner which is oppressive to the Plaintiffs and/or in disregard of the Plaintiffs' interest as the minority shareholders of Thai Odyssey Group; and
b. have done or threaten to do such acts which unfairly discriminate against or is otherwise prejudicial to the Plaintiffs as minority shareholders of Thai Odyssey Group.
[10] The various acts of oppression are usefully summarised by the Plaintiffs as follows:
a. The Plaintiffs', in particular, Leon's exclusion from management of Thai Odyssey Group and D1 to D6 (particularly Din) acting in an autocratic manner, resulting in breach of the Plaintiffs' legitimate expectation to manage the Thai Odyssey business;
b. D1 to D6 (particularly Din)'s use of artificial reasons to terminate Leon as the Group Managing Director to gain complete control of Thai Odyssey Group;
c. D1 to D6 (particularly Din)'s dilution of the minority shares of the Plaintiffs;
d. D1 to D6 (particularly Din)'s mismanagement of the affairs and operations of TOSB, TOGSB and SOVB, which are not bona fide and not in the best interests of Thai Odyssey Group;
e. D1 to
