A legitimate expectation of a shareholder to participate in company management can be considered in minority oppression claims; removal without a fair process may constitute unfair prejudice.

JUDGMENT

Liza Chan Sow Keng JC:

Introduction

[1] This is a minority oppression claim by the Plaintiffs against the 1st and 2nd Defendants in relation to the conduct of the affairs of the companies named as 3rd to 13th Defendants ("unless specifically referred to are referred to as "the companies"). It is alleged that the 2nd Plaintiff has a legitimate expectation to remain on the boards of the companies given the relationship between the 2nd Plaintiff, the 1st Defendant and the 2nd Defendant in respect of the incorporation and operation of these companies. It also arises from the conduct of the parties. It is further alleged that the 2nd Plaintiff and/or her nominees' removal is a breach of the legitimate expectation resulting in unfairly prejudicial conduct within the meaning of s 346 of the Companies Act 2016 (" CA 2016").

[2] After a full trial conducted virtually online by using the Zoom video conferencing platform over 4 days, confined to the issue of liability under s 346 CA 2016, I had on 23 June 2022 decided that the Plaintiffs have on a balance of probabilities, succeeded in establishing a case of oppression under the said section against the Defendants. Parties were to address the court on remedies to be ordered and costs.

[3] This judgment contains the full reasons for my decision. At the outset, I ought to say that on the facts of the present case, I am in accord with the arguments canvassed by the Plaintiffs' counsel and have adopted his submissions in these grounds.

Background And Parties

[4] The background facts are culled from the cause papers and the submissions of the parties.

[5] For the ease of reference, the parties have agreed that they will be referred in this action as follows:

[6] The action has its genesis in the rehabilitation of an abandoned mixed development known as the Plaza Pantai Project ("the Project") in Jalan Pantai Baharu, Kuala Lumpur. The Project was to develop 6 tower blocks with a retail podium and 3 levels of basement car park. The development was funded by loan facilities granted by Malaysian Building Society Berhad ("MBSB") to Atlas Corporation Sdn Bhd (In Liquidation) ("Atlas"). The Project was charged to MBSB as collateral for the loan facilities. Atlas defaulted in its loan repayment obligation to MBSB and was wound up on 2 February 2004.

[7] Lee knew Jenny Liew ("Jenny") since 2003. In 2009, Lee was introduced to Mei by Jenny. Mei's father, Dato' Ding Poi Chung ("Dato' Ding") developed the hotel in Lumut. Lee wished to work together with Dato' Ding to acquire the Project but eventually, it was Mei who agreed to participate. Lee invited Tee to participate in the Project. Lee and Tee knew each other professionally since 1997. Jenny also introduced a Shermaine Ooi ("Shermaine") to Lee.

[8] Lee had a proposal to acquire the Project from MBSB. The proposal's investment structure envisaged 2 groups of participants: (i) Investors, and (ii) Promoters. The eventual Investors for the Project were Mei (the 2nd Plaintiff), Lee (1st Defendant), Tee (the 2nd Defendant) and Shermaine. The Investors were required to collectively put up a sum of RM10 million as working capital for the Project whilst Promoters on the other hand, were not required to inject working capital.

[9] Mei started to meet with MBSB during the last quarter of 2009 to see whether or not the Project could be secured. Marina Sanctuary Resort Sdn Bhd ("MSR") a company belonging to Dato' Ding made an offer by letter dated 17 December 2009 to MBSB to take over the Project. Lee and Mei attended a meeting with MBSB thereafter and presented the proposal prepared by Lee. MBSB issued a Conditional Letter of Offer dated 5 February 2010 ("MBSB's Conditional Letter of Offer") agreeing to MSR's offer. After the issuance of this letter, a February 2010 meeting was called by Lee attended by the Investors and Promoters.

[10] At the February 2010 meeting, the Investors, pursuant to one of the terms of MBSB's Conditional Letter of Offer, issued their r