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2014 MarsdenLR 1147
HIGH COURT MALAYA IPOH
HO HAU WONG & ORS – Appellant
Versus
EMERALD DEALS SDN BHD & ORS – Respondent
[Civil Suit Nos: 22NCVC-102-06/2013 22NCVC-104-06/2013 & 22NCVC-109-06/2013]
A consent order is binding and cannot be set aside without a fresh action, except in instances of clerical errors or misrepresentations of the court's intent.
Headnote:(A) Companies Act 1965 - Statutory interpretation of consent orders - Genuine disputes concerning shareholding and funds managing in joint companies - Sections concerning unfair prejudice and rights of shareholders - The essential agreement between parties needed clarity concerning directorship and funds management, which led to significant legal discussions on consent and authority - No authority given to legally amend or withdraw police reports directly connects to resultant judgments or penalties - Court emphasized the binding nature of consent orders and settled disputes should proceed with existing terms unless otherwise negotiated - Dismissing attempts to set aside the consent order based on procedural grounds. (Paras 1-96)
Facts of the case:
The case originates from disagreements about financial contributions and management of three development companies where significant funds were invested. The parties reached a mediated settlement involving establishing contributions and shareholdings - clarity in directorship was also discussed amidst ongoing disputes.
Findings of Court:
The court found no basis for setting aside the consent order; all parties maintained their authorizations throughout the negotiations and signed an agreement following a lengthy mediation process, which was legally binding.
Issues: Whether consent order terms could be set aside due to lack of consent or misunderstanding - Issues of authority during the negotiations were central to this determination.
Ratio Decidendi: The court ruled that consent orders are binding upon the parties once entered, and the only path to change such an order is through a fresh suit unless the content did not reflect the court’s intention or was misinterpreted - affirming that absence of consent must be demonstrably proven to be valid.
Result: Application to set aside consent order dismissed with costs awarded to the plaintiffs.
Key Points: - The judgment discusses whether a consent order can be set aside by fresh action or by motion, and references exceptions (slip rule, clerical errors, or misstate of intent) (!) (!) . - It analyzes lack of consent as a potential ground to set aside a consent order and emphasizes that absence of consent typically requires a fresh action, with discussions of authority and representation during negotiations (!) (!) (!) . - It addresses the meaning and limits of "liberty to apply," stating it is for working out the judgment or seeking directions, not for unilateral variability of the consent order, and that manifest errors may be corrected under proper variation mechanisms rather than setting aside (!) (!) (!) (!) . - It clarifies that consent orders are binding contracts between the parties and can be varied or set aside only as permitted by law and proper procedure, with emphasis on fresh action for setting aside and not in the original action except for slip-rule corrections (!) (!) . - It notes that attempting to set aside a consent order due to misinterpretation or "global settlement" notions without proper basis is unsupported, reinforcing that alterations require appropriate process (!) (!) .
What is the proper mode to set aside a consent order: a fresh suit or an interlocutory application?
What are the grounds to set aside a consent order and how does lack of consent by a party affect its validity?
What is the effect and limits of "liberty to apply" in consent orders and can it be used to unilaterally vary terms?
| Table of Content |
|---|
| 1. overview of the case and parties' relationships (Para 1 , 2 , 3 , 4 , 5) |
| 2. consent agreement for account and shareholding adjustments (Para 6 , 7 , 8 , 9 , 10) |
| 3. court directives for mediation and negotiation (Para 11 , 12 , 13 , 14 , 15) |
| 4. conditions for setting aside consent orders (Para 23 , 24 , 25) |
| 5. delineation of a party's consent to a judgment (Para 26 , 27 , 28 , 29) |
| 6. court's view on terms of directorship and fairness (Para 50 , 54 , 56 , 57) |
| 7. implications of shareholding proportions on contributions (Para 61 , 62 , 63 , 64) |
| 8. effects of external interventions on the settlement (Para 76 , 78 , 79 , 80) |
| 9. proposal of amendments and their implications (Para 84 , 87 , 88 , 90) |
[1] These 3 suits were by consent of the parties consolidated and heard 30 together. In brief the dispute that had arisen could be traced to the monies paid at various times to the personal account of Mr Chin Peng Sin ("CPS") by the First Plaintiff ("P1") either by himself or through his nominees the Second and Third Plaintiffs ("P2 and P3") in each of the 3 suits. Some RM31 million was said to have been so paid to CPS for the purpose of identifying lands in Perak for purchase and subsequently to develop the lands. CPS being a developer himself was best placed and poised for such a venture; the Ps being based in Hong Kong and having the cash but not the expertise with respect to developing lands for residential and commercial purposes in Malaysia.
[2] The lands where registered in the name of nominee companies incorporated for the above purpose of undertaking the development. The three companies ("the Companies") are Emerald Deals Sdn Bhd ("ED") as the First Defendant ("D1") in the first suit, Glamour Ideals Sdn Bhd ("GI") as D1 in the second suit and Glamour Portfolio Sdn Bhd ("GP") as D1 in the third suit. The various other Defendants were the directors and/or shareholders of the respective D1 in each of the 3 suits. CPS was named as D2 in the 2nd and 3nd suits whereas his son Joseph Chin who had affirmed all the affidavits filed in the various interlocutories including this current application was named as D3 in the 1st and 2nd suits and D4 in the 3nd suit.
Problem
[3] As it is not uncommon in arrangements of this nature, differences soon arose, caused no less by what the Plaintiffs ("Ps") referred to as a lack of transparency and accountability with respect to the funds they have pumped into the development of lands held in the 3 Companies and conversely by what the Defendants ("Ds") perceived as interfering with the management of the 3 Companies which were under the control of CPS and his nominees named as the other Defendants in the 3 suits after D1.
[4] To cut the long story short the Ps sued the Ds for inter alia:
1. an accounts inquiry into the respective investments of the parties in each of the 3 Companies;
2. a declaration that the shareholding of the parties in each of the 3 Companies shall be in accordance with the respective investments of the parties in the companies;
3. a declaration that the Companies hold the various lands registered in its names as a constructive trustee for the Ps based on the declared shareholding as may be determined by the Court and that the Ds do transfer to the Ps the respective portions of the various lands;
4. an injunction that pending the disposal of the 3 cases, the Ds be restrained from transferring the said lands or otherwise dealing with them.
[5] Briefly the Ds denied that the Ps were entitled to the prayers and reliefs sought and that the Ps' shareholding of 28% in the Companies was all that they were entitled and if there are any more loans outstanding which have not been converted into capital in the Companies, then these loans are illegal and hence irrecoverable for being unlicensed money lending transactions.
[6] At any rate, reasonableness and rationality prevailed and the parties on 27 February 2014 agreed to the appointment of KPMG as the Court-appointed Expert Accountant to prep
