Shareholder's pre-action discovery requires establishing a specific cause of action and meeting certain legal criteria; broad or vague requests will be dismissed.

Quay Chew Soon J:

Introduction

[1] The Plaintiff ("P") is a shareholder in the Defendant company ("D"). The principal activity of D consists of hotel property ownership of the Rainbow Paradise Beach Resort ("Hotel"). D's wholly owned subsidiary, Champsurf Sdn Bhd ("Subsidiary"), manages and operates the Hotel.

Enclosure 1

[2] P filed an Originating Summons vide encl 1 ("Encl 1") which prayed for the following:

(a) D to engage an independent accountant to conduct an independent investigation ("Independent Investigation") into the following issues arising from the Financial Report of D for the year ended 31 December 2020 ("Financial Report"):

(i) the declaration by the external auditors of D ("Auditors") of their inability to express an opinion on the Financial Report;

(ii) irregular reduction in the current assets of D by RM4 million;

(iii) unexplained reduction in revenue;

(iv) unreasonably high operational and administrative costs;

(v) the observation by the Auditors that the system of internal and accounting control of the Subsidiary is inadequate and that certain accounting documents for January and February 2020 were not available for audit; and

(vi) any other material issues or inconsistencies in the Financial Report as may be identified by the said independent accountant;

(b) the costs of the Independent Investigation be borne by D;

(c) in the alternative, a general meeting of D be convened to consider a motion to engage an independent accountant to conduct the Independent Investigation;

(d) further or in the alternative, the documents listed in the Annexure to Encl 1 be provided to P for the purposes of P engaging an independent accountant to conduct the Independent Investigation and/or to identify parties responsible for any transgressions for the purposes of commencing legal proceedings, and the costs thereof be paid for by D ("Prayer (d)").

[3] During submissions, P abandoned prayers (a), (b) and (c) above. P pursued only Prayer (d), which is essentially an application for pre-action discovery. The documents sought by P, as listed in the Annexure to Encl 1, are as follows:

(a) all Board resolutions and/or circular resolutions passed by the Board between 1 January 2021 and 29 October 2021 ("Board Resolutions");

(b) the management report of D in respect of the following for the years 2020 and 2021:

(i) trial balance;

(ii) trial balance for trade debtors;

(iii) trial balance for trade creditors;

(iv) trial balance for by projects;

(v) trading and profit and loss account;

(vi) balance sheet;

(c) bank statements and opening balances of D's and the Subsidiary's accounts for the years 2020 and 2021;

(d) journal transaction / journal listing;

(e) general ledgers / project ledgers by projects;

(f) debtors' ledgers / sales ledgers;

(g) creditor ledgers / purchase ledgers;

(h) debtors' summary aging;

(i) creditors summary aging;

(j) sales invoice listing;

(k) suppliers' invoice listing;

(l) profit & loss items - notes to the accounts:

(i) fixed assets schedules in details listings;

(ii) investment properties schedules in details listing;

(iii) other receivable listing;

(iv) other payable listing;

(v) stock listing;

(vi) profit recognition working sheet;

(vii) fixed deposits listing;

(m) creditors' statements & address;

(n) a copy of the latest "No-Guarantee Rental Agreement";

(o) official Ministry of Health list of the number of PUS (Person Under Surveillance) checked into the Hotel;

(p) laundry, other Building Maintenance, Insurance Policies, Renewal of Operational Licences.

[4] I dismissed P's application for pre-action discovery vide Prayer (d) of Encl 1. Here are my reasons.

The Law On Pre-Action Discovery

[5]Order 24 r 7A(3) of the Rules of 2012 requires an applicant seeking discovery of documents before the commencement of proceedings to fulfill the following requirements, namely:

(a) state the material facts pertaining to the intended proceedings;

(b) state whether the person against whom the order is sought is likely to be party to subsequent proceedings in C