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2022 MarsdenLR 1998
HIGH COURT MALAYA KUALA LUMPUR
WAN AZRYN WAN AB RASHID – Appellant
Versus
ZAINAL ABIDIN ABD JALIL & ORS – Respondent
[Civil Suit No: WA-22NCC-477-10/2021]
The court ruled that although there were serious issues to be tried regarding the validity of share transfers, the balance of convenience did not favor granting an injunction as damages were deemed an adequate remedy.
Headnote:(A) Rules of Court 2012 – Order 29 – Interlocutory injunction – Plaintiff sought an injunction to restrain 1st and 2nd Defendants from transferring shares in the 3rd Defendant pending trial. Application dismissed – Court found that although serious issues were identified to be tried, balance of convenience did not favor injunction and damages would be an adequate remedy if the injunction was refused. (Paras 22-61)
Facts of the case:
Plaintiff and 1st Defendant were directors and shareholders of the 3rd Defendant. Dispute regarding share transfers initiated by the Defendant and Plaintiff's opposition to these transfers resulted in current injunction application.
Findings of Court:
The Court determined that the transfers had significant issues but noted that the balance of convenience favored the 1st and 2nd Defendants.
Issues
: Whether the share transfers were valid and the implications of the injunction on shareholders' rights.
Ratio Decidendi:
Serious questions were found but the balance of convenience did not favor the Plaintiff, as damages could adequately remedy any financial loss suffered.
Result:
Application for injunction dismissed.
JUDGMENT
Introduction
[1] This is an application via encl 4 by the Plaintiff for an interlocutory injunction against the 1st and 2nd Defendants pursuant to O 29 of the Rules of 2012 ("ROC 2012"). This interlocutory injunction is requested pending the disposal of the Plaintiff's writ action. At the conclusion of the hearing, this Court on 21 February 2022 dismissed the Plaintiff's application. The following are the Grounds of Judgment of this Court.
Background Facts
[2] The Plaintiff and the 1st Defendant were the shareholders of the 3rd Defendant when it was incorporated on 22 February 2016. The total issued and paid-up capital of the 3rd Defendant is RM5,000,000.00 divided into 5,000,000 ordinary shares of which the 1st Defendant held 3,900,000 ordinary shares and the Plaintiff held 1,100,000 ordinary shares. The Plaintiff and 1st Defendant were appointed as directors of the 3rd Defendant sometime in March 2016.
[3] The 3rd Defendant held 360,000,000.00 shares in a public listed company known as Dagang NeXchange Berhad ('DNeX') which were mainly procured through a RM50,000,000.00 loan ('the SME Loan") from the Small Medium Enterprise Development Bank ("SME Bank'). For the purpose of the SME Loan on 16 June 2016, the 3rd Defendant executed a facility agreement with SME Bank. The SME Loan was to be repaid over a term of 5 years.
[4] The 3rd Defendant also holds 32,500,000 shares in a public listed company known as Theta Edge Bhd ("Theta") which were acquired by the 3rd Defendant through its subsidiary, Arcadia Fintech Sdn Bhd ie some 30.025% of its total shareholding.
[5] For the SME Loan, both the Plaintiff and the 1st Defendant were required to, among others, provide personal guarantees and charge various personal assets to SME Bank and pledge and / or charge their shares in the 3rd Defendant to SME Bank. In relation to this, the Plaintiff and 1st Defendant executed a Joint & Several Guarantee dated 16 June 2016 in favour of SME Bank for RM50,000,000 to guarantee the SME Loan.
[6] The 2nd Defendant came into the picture to assist in repaying the SME Loan and the Plaintiff and the 1st Defendant signed a directors' circular resolution on 10 April 2019 resolving that the 3rd Defendant be authorised to accept the terms and conditions negotiated with the 2nd Defendant to regularise the SME Loan.
[7] According to the 1st Defendant and 2nd Defendant on 11 April 2019, the 1st Defendant entered into a friendly loan agreement with the 2nd Defendant where the 2nd Defendant agreed to make payment of RM1,012,500.00 to SME Bank for the 2nd quarterly repayment for 2019 which was paid on 12 April 2019. The 2nd Defendant assisted with further repayments under the SME Loan. Including the RM1,012,500.00 paid on 12 April 2019, the 2nd Defendant paid a total of RM5,075,770.62 from 12 April 2019 to 6 April 2021 towards the repayment of the SME Loan.
[8] On or around 9 May 2019 the Plaintiff and the 1st Defendant executed an undated directors' resolution ("Shares Transfer Resolution") and two share transfer forms ("Share Transfer Forms") to facilitate the transfer of 600,0 shares of the Plaintiff in the 3rd Defendant ("the 600.0 Shares") to the 1st Defendant and the transfer of 805.0 shares of the 1st Defendant in the 3rd Defendant ("the 805,000 Shares") to the 2nd Defendant.
[9] Then from the beginning of 2020, the Plaintiff sought from the 1st Defendant further information regarding the liabilities with SME Bank, the disposal of 3rd Defendant's shares in DNeX and the Plaintiff's shares in the 3rd Defendant but received none.
[10] On 28 September 2020 emailed a letter dated 28 September 2020 to the 3rd Defendant's Company Secretary informing that the Plaintiff was concerned that documents had been imprinted with use of his e-signature and treated as having his approval to the contents, to which he disagreed. In the letter, the Plaintiff further informed that:
a) He disapproved of any imprinting of his e-signature and that his man
