A Plaintiff lacking locus standi cannot challenge a valid Settlement Agreement; doctrine of res judicata bars re-litigation of settled matters.

JUDGMENT

Ahmad Fairuz Zainol Abidin J:

Introduction

[1] Enclosures 12 and 27 are the applications by the Defendants to strike out the Writ and Statement of Claim pursuant to O 18 r 19 (1) (a) and/or (b) and/or (d) and/or O 92 r 4 of the Rules of 2012. At the conclusion of the hearing, this Court allowed the applications. This is the Grounds of Judgment of this Court.

Background Facts

The Plaintiff's case

[2] The pleaded case of the Plaintiff is reproduced below:

[2.1] The 1st Defendant was awarded a construction project for Radio Televisyen Malaysia in Kuantan ("RTM Kuantan Project"). Pembinaan Bukit Safa Sdn Bhd ("Bukit Safa") was appointed by the 1st Defendant as its subcontractor.

[2.2] Sometime in August 2005, the Plaintiff was engaged by Bukit Safa to do earthworks and roads for RTM Kuantan Project. The Plaintiff was also engaged by Bukit Safa to carry out earthworks and roads at UNITEN, Muadzam Shah, Rompin;

[2.3] In 2006, the Plaintiff completed both RTM Kuantan Project and UNITEN project and there was a sum of RM 639, 875. 22 due and owing from Bukit Safa to the Plaintiff. The Plaintiff filed a civil suit in Kuantan High Court vide Civil Suit No. 22-70-2006 against Bukit Safa and obtained a judgment for the sum of RM639,875.22.

[2.4] On 15 June 2009, Bukit Safa was wound up and the Official Receiver was appointed as the liquidator;

[2.5] Later, it was discovered by the Plaintiff that sometime in 2005, Bukit Safa had novated its contract for a project for RTM in Senawang to the 2nd Defendant. It was also discovered that a full statement of account was prepared by the 1st and the 2nd Defendants on 18 August 2014 whereby both Defendants acknowledged that RM7,635,716.89 was due and owing by the 1st Defendant to Bukit Safa. The said document dated 18 August 2014 was treated as a settlement agreement by the Defendants;

[2.6] Despite the acknowledgment of the debt by the Defendants, the 1st Defendant nevertheless unilaterally agreed to pay the sum to the 2nd Defendant under the Settlement Agreement; and

[2.7] On 30 January 2019, the 2nd Defendant vide a Kuala Lumpur Civil Suit No. WA-22C-84-08/2017 filed against the 1st Defendant obtained an order for the balance of RM5,937, 221.87 to be paid by the 1st Defendant to the 2nd Defendant under the Settlement Agreement.

[3] It was argued by the Plaintiff, in view that Bukit Safa was in liquidation since 2009, the agreement to pay the debt owed to Bukit Safa to the 2nd Defendant was a dissipation of Bukit Safa's asset and is unlawful under s 472 of the Companies Act 2016 ("the Act") (s 223 of the Companies Act 1965). The Settlement Agreement is therefore null and void. It follows that the Order dated 30 January 2019 was made in contravention of s 472 of the Act.

[4] The Plaintiff filed the present suit and prayed for the following reliefs:

(i) That the Order dated 30 January 2019 in Kuala Lumpur Civil Suit No: WA-22C-84-08/2017 ("Suit 84") be set aside;

(ii) Costs;

(iii) Anyother order or reliefs deemed fit by this Honourable Court.

The Defendants' case

[5] The Defendants submitted that the 1st Defendant was awarded a construction project for RTM in Senawang ("RTM Senawang Project"). In September 2004, the 1st Defendant appointed Bukit Safa as the sub-contractor for the said Project.

[6] Sometime in 2005, the 1st Defendant appointed the 2nd Defendant as the sub-contractor replacing Bukit Safa due to cash flow problem of Bukit Safa ("Novation"). The 2nd Defendant completed the RTM Senawang Project as well as 13 other projects in which the 2nd Defendants was also the sub-contractor appointed by the 1st Defendant.

[7] On 18 August 2014, the 1st and the 2nd Defendants reached a settlement to finalise and close the accounts in respects of the RTM Senawang Project and the other 13 projects ("Settlement Agreement"). By virtue of the Settlement Agreement, the 1st Defendant agreed to pay the amount due to the 2nd Defendant by instalment. The 1st Defendant however had breached the Settlement Agreement and thus