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2021 MarsdenLR 547
HIGH COURT MALAYA KUALA LUMPUR
WRP ASIA PACIFIC SDN BHD – Appellant
Versus
LEE SON HONG & ORS (ENCLS 17 24 27 73) – Respondent
[Civil Suit No: WA-22NCC-390-08/2020]
Court determined sufficient grounds for conspiracy and dishonesty claims, allowing amendment, discovery, and particulars for the plaintiff's case.
Headnote:(A) Common Law – Breach of fiduciary duty, Conspiracy to injure – The Plaintiff claimed damages from Defendants for overpayments due to fraud and breach of duty, claiming RM49,954,578.84 was paid as a result of collusion – Court allowed an amendment to the claim, dismissed the application to strike it out, allowed discovery for relevant documents, and allowed particulars for the claim except on market value of factory lines – Defendants raised defenses claiming honesty in dealings and the actual market value of respective lines. (Paras 1-44)
Facts of the case: Plaintiff alleges Defendants conspired to create fraudulent transactions leading to overpayment; Plaintiff seeks recovery from Defendants for damages suffered as a result.
Findings of Court: Court found sufficient grounds for the claims and allowed applications made.
Issues: I.e., whether the amendments to claims prejudice the Defendants, the sufficiency of pleadings for conspiracy, and discovery of documents.
Ratio Decidendi: The Court upheld that the Statement of Claim sufficiently raised causes of action for conspiracy and dishonest assistance, with necessary particulars established, allowing to proceed.
Result: Amendment Application allowed; Striking Out Application dismissed; Discovery Application allowed; Application for Further and Better Particulars allowed excluding market value request.
JUDGMENT
(Enclosures 17, 24, 27 And 73)
A. Introduction
[1] The following applications are the subject matter of these grounds of judgment:
a. Enclosure 17, the 3rd to 5th Defendants' application to strike out the Statement of Claim filed in this action ("Striking Out Application");
b. Enclosure 24, the Plaintiff's application for discovery against the 3rd to 5th Defendants ("Discovery Application");
c. Enclosure 27, the Plaintiff's application for further and better particulars against the 3rd to 5th Defendants ("Application for Further and Better Particulars"); and
d. Enclosure 73, the Plaintiff's application to amend the Statement of Claim ("Amendment Application").
B. Background Facts
[2] I will start by identifying the parties involved in this suit:
a. The Plaintiff is a glove manufacturing company.
b. The 1st Defendant was a shareholder and director of the Plaintiff, and its managing director and chief executive officer. He was also a director of Advanced Healthcare Products Sdn Bhd ("AHP") and Advanced Medical Products Sdn Bhd ("AMP").
c. The 2nd Defendant is the 1st Defendant's wife. She was also a shareholder and director of the Plaintiff. Further, the 2nd Defendant was a majority shareholder of Equatorion Sdn Bhd ("Equatorion"), a company that has since been wound up.
d. The 3rd Defendant is a Malaysian company, and the 4th and 5th Defendants are directors of the 3rd Defendant.
[3] The Plaintiff claimed that it discovered a total of RM49,954,578.84 that had been paid by the Plaintiff to the 3rd Defendant ("Alleged Overpayment Sum"). The Plaintiff claimed that:
a. The Alleged Overpayment Sum arose from transactions involving the supply of factory lines by the 3rd Defendant to the Plaintiff.
b. The factory lines were overpriced, and the overpricing was done fraudulently, and pursuant to collusion between the Defendants.
c. There are several highly irregular inconsistencies in the supporting documents for the factory lines.
d. The 1st and 2nd Defendants, with the assistance of the 3rd to 5th Defendants, had created sham documents and/or transactions to disguise the illegal payment of the Alleged Overpayment Sum.
e. A portion of the Alleged Overpayment Sum paid to the 3rd Defendant for the supply of the factory lines was eventually channelled to Equatorion and AHP by the 3rd Defendant.
f. Documents related to AHP and AMP were removed from the Plaintiff's premises.
[4] Thus, the Plaintiff claimed that:
a. The 1st and 2nd Defendants breached their common law, statutory, and/or fiduciary duties by failing to act honestly in the discharge of their duties; failing to act in good faith and in the best interest of the Plaintiff; placing themselves in a position of a conflict of interest; and failing to act with proper skill, care and/or diligence.
b. The 3rd to 5th Defendants had facilitated the 1st and 2nd Defendants in the commission of the breaches described above.
c. The 1st and 2nd Defendants, with the assistance of the 3rd to 5th Defendants, had conspired to wrongfully injure the Plaintiff.
[5] The 3rd to 5th Defendants' defences are as follows:
a. The contract values of the factory lines reflect the actual market values of the lines, and are not fraudulent.
b. The 1st Defendant who was the managing director of the Plaintiff had specified that a portion of the works relating to the production and commissioning of the factory lines had to be sub-contracted to a nominated sub-contractor, namely Equatorion. The works under the sub-contract portion were identified in a sub-contractor agreement dated 17 March 2015 entered into between the 3rd Defendant and Equatorion ("Sub-Contractor Agreement"). Payments were then made to both the 3rd Defendant and Equatorion.
c. The 3rd to 5th Defendants had acted reasonably and honestly in their dealings with the Plaintiff, and in particular with the 1st Defendant as managing director of the Plaintiff.
[6] The 3rd to 5th Defendants further claimed that there are sums due and owing by the Plaintiff
