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2020 MarsdenLR 1376
HIGH COURT MALAYA SHAH ALAM
LAGENDA ERAJUTA SDN BHD – Appellant
Versus
ACRE SQUARE SDN BHD & ORS (ENCL 36) – Respondent
[Originating Summons No: 24NCC-169-12/2018]
Proposed Interveners are entitled to join as parties in an action if their legal rights are directly affected; failure to comply with statutory requirements can invalidate restraining orders.
Headnote:(A) Companies Act 2016 - Section 368(2) - Rules of Court 2012 - Application for intervention by Proposed Interveners ('PIs') in a sanction proceeding concerning a development project. The court determined that the PIs, as bona fide purchasers, had a direct interest affected by the Proposed Scheme and should be allowed to intervene. Grounds for setting aside the Ex-Parte Order included non-disclosure of material facts and failure to comply with statutory requirements. The court ruled that the Applicant did not prove necessity for the restraining order and failed to make full and frank disclosure during ex-parte proceedings. (Paras 3, 19, 24-29)
(B)
Intervention – Law on intervention permits an interested party to join proceedings if their legal rights are directly affected. The PIs established a legitimate interest in the matter. (Paras 7, 28)
(C)
Bona Fide - The Proposed Scheme was found to be not bona fide and likely to fail; the Applicant did not disclose the financial inability of the White Knight necessary for the revival of the project. (Para 15)
(D)
Ex-Parte Order - Grounds for setting aside included lack of compliance with procedural requirements and material non-disclosure by the Applicant during ex-parte hearings. (Paras 6, 29) (E)
Result:
Enclosure 36 is granted, costs to the PIs.
JUDGMENT
[1] This is a Notice of Application filed by the Proposed Interveners ('PIs') in an Originating Summons('OS') commenced by the Applicant who was the developer of a major development project in Klang, Selangor. Enclosure 36 is the PIs' application which seeks, inter alia:
(i) For leave to be granted to the PIs to intervene in the proceedings and become a party to the proceedings and the intitulement be amended to include the PIs as Respondents herein;
(ii) For an order that the Ex-Parte Order dated 3 January 2019 be set aside forthwith.
Factual Background
[2] A summary of the material facts from the PIs' submission is as follows:
(i) Through prayer (1) in encl 36, the PIs are seeking leave of this Honourable Court for the PIs to intervene in the proceeding herein.
(ii) The Applicant is the developer of a huge mixed development project ('Project') known as '1 Gateway' in Klang, Selangor on the project lands owned by Port Klang Authority ('PKA'). 4 phases in the Project were launched but subsequently abandoned by the Applicant.
(iii) The 14 pieces of Project Lands measuring approximately 17.27 acres were not owned by the Applicant but PKA. This is a huge development project worth about RM500 million as at 2012.
(iv) The PIs are purchasers of single/duplex shoplex or 3 and 4 storey shopoffices (hereinafter referred to as 'the Units') of the '1 Gateway' Project developed by the Applicant.
Grounds In Support Of Encl 36
[3] Reliance was principally placed on the settled law principle that the Court will allow an interested party to intervene if his legal rights and interest in relation to the subject matter of the action would be directly affected by any order which may be made in the action. Reference made to:
(i) Pegang Mining Co Ltd v. Choong Sam & Ors, .
(ii) Order 15 r 6(2) & (3) of the Rules of , 2012 (' ROC ').
(iii) Pilecon Engineering Bhd v. Malayan Banking Berhad & Ors.
[4] The PIs also submitted that they have fulfilled the test for intervention on these grounds:
(i) Pursuant to the respective Sale and Purchase Agreements entered into between the PIs, the Applicant and Lembaga Pelabuhan Klang as listed in para 6 of the PIs' Affidavit in encl 37, the PIs are the purchasers of the units in the '1Gateway' Project (hereinafter referred to as 'the Project');
(ii) The PIs are bona fide purchasers and have entered into valid sale and purchase agreements with the Applicant for the purchase of the units (Exhibit 1 of encl 37);
(iii) The Applicant had neither disputed the Sale and Purchase Agreements ('SPAs') entered into nor raised any fact to cast doubt over its validity;
(iv) In fact, the PIs are named/listed as 'the Scheme Creditors' in the Applicant's Affidavit in Support of the initial application in encl 1, details of which are set out in para 9 of encl 3 and the Lists of Scheme Creditors of the Applicant ('Senarai Nama Pembeli') which can be seen at Exhibit 'A3' of encl 3;
(v) In view that the objectives of the Proposed Scheme are to revive the Project including the Units purchased by the PIs as alleged by the Applicant (see p 503 of encl 38), the PIs have a direct interest in the Proposed Scheme;
(vi) Clearly, when the PIs herein come within the definition of Scheme Creditors, the PIs have the requisite legal right or interest to be joined as parties in the proceeding herein. The PIs would be bound by the Proposed Scheme if it is approved and sanctioned by the Court. PIs' rights and interest pursuant to the respective SPAs would be compromised and affected in the event that this Honourable Court sanctions the Applicant's Proposed Scheme.
Grounds For Setting Aside The Ex-Parte Orders
[5] The grounds of the PIs application to set aside the said ex-parte Order, are inter-alia as follows:
(a) The Application for the Restraining Order and the Proposed Scheme is not bona fide and bound to fail;
(b) The Applicant did not fully disclose the material facts and was not frank to this Honourable Court during the ex-parte hearing of
