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HIGH COURT MALAYA KUALA LUMPUR
KUALA IBAI DEVELOPMENT SDN BHD – Appellant
Versus
DATO CHANG JONG YU & ORS – Respondent
[Civil Suit No: WA-22NCvC-356-06/2022]
Key Points: - The court struck out the Plaintiff's suit against the Second Defendant for lack of particulars and time-barred claims. (!) (!) - The Plaintiff failed to demonstrate a reasonable cause of action against the Second Defendant due to absence of mandatory particulars and certification details. (!) (!) - The Third Defendant's application found the action time-barred under the Limitation Act and lacking involvement or control over plaintiff's management. (!) - The Court held that multiple suits on the same matter against the same parties constitute an abuse of court process and multiplicity of proceedings. (!) (!) (!) - The Plaintiff’s SoC did not plead the knowledge/particulars of the Third Defendant’s participation; no concrete modus operandi of conspiracy against Third Defendant was pleaded. (!) (!) (!) - The Plaintiff’s claims against the First and Fourth Defendants were struck out due to lack of locus standi and involvement, constituting abuse of process. (!) (!) - Costs were awarded to the respective successful defendants (RM10,000 to Second Defendant; RM10,000 to First and Fourth Defendants). (!) (!) (!) - The court referenced and enforced finality in litigation and prohibition against relitigating issues across suits. (!) (!) - The Court accepted that the 2006 loan and subsequent restructurings are time-barred and not sufficiently connected to the Plaintiff’s actionable claims against the Third Defendant. (!) (!) (!)
JUDGMENT
The Plaintiff's Suit
[1] The Plaintiff, a private limited company carrying on business in investment holding and management of properties, sued the Defendants for conspiracy to defraud in the entire management and administration of the financial facilities granted by the Third Defendant. This was alleged during the period when the First Defendant was the Managing Director of the Plaintiff. The particulars of fraud pleaded are:
(a) A loan granted by the Third Defendant to the Plaintiff on 6 December 1999 of RM32,000,000 was in default. As of 6 October 2005, only RM15,954,537.73 was repaid. In 2006 the audited accounts show that the outstanding sum was RM18,676,925;
(b) A new loan of RM27,250,000 was granted by the Third Defendant in 2006 whereby RM18,750,000 was to settle the 1999 loan and RM8,500,000 was for the Plaintiff's working capital;
(c) The tranche for working capital was to be drawn down and utilised expressly for the following purposes:
(i) Apartment B, developed by Ibai Ria Sdn Bhd (IRSB), a wholly-owned subsidiary of the Plaintiff - RM3,000,000;
(ii) 2 Storey Terrace houses, developed by Ibai Leisure Sdn Bhd (ILSB), another wholly-owned subsidiary of the Plaintiff - RM4,500,000; and
(iii) Bungalow lots, developed by Ibaimas Sdn Bhd (in liquidation) - RM1,000,000.
(d) The said drawdown was upon the issuance of the Architect's certification where 90% of the certificate value was to be financed by this tranche. The Second Defendant had held himself out expressly as the Architect of the above projects;
(e) The Plaintiff's 2006 Audited Accounts showed that a total of RM20,102,250 was drawn down. There was RM918,654,000 unaccounted for from the drawdown which was allowed by the Third Defendant although there was no record of the Second Defendant's certification;
(f) The Plaintiff's 2007 Audited Accounts showed RM2,000,000 was drawn down although the words done was only in the sum of RM1,564,237 so the differential sum of RM435.763 was unaccounted for. Again, this was allowed by the Third Defendant although there was no record of the Second Defendant's certification;
(g) The Plaintiff's 2008 Audited Accounts showed a further drawdown of RM3,256,968 although the work done was in the sum of RM220,740. Thus, the differential sum of RM3,036,228 was unaccounted for. Again, there was a record of any certification by the Second Defendant;
(h) For 2009 there was a drawdown of RM528,455 but there were no works done. So this unaccounted figure was the result of the conspiracy that involved the Second and Third Defendants;
(i) In 2009, the First Defendant had utilised the Plaintiff's loan to re-pay his related companies' debts to the serious detriment and losses to the Plaintiff;
(j) The First Defendant then had represented a restructuring exercise on the pretext that the Plaintiff was in financial distress, that was undertaken by a special purpose vehicle he jointly owned. The Second Defendant's wife was also one of its directors and shareholders;
(k) There were some involvement of land deals involving the First, Second and Fourth Defendants. The First and/or the Fourth Defendants had induced the directors and shareholders of the Plaintiff to obtain loans and subsequently restructured them but at the same time fraudulently diverted the only project that generates income for repayment in favour of their nominees to the detriment of the Plaintiff;
(l) On 9 November 2009 the Third Defendant agreed to restructure the 2006 loan but had allowed a drawdown of the balance of RM1,058,052.80 which was utilised by the special purpose vehicle which the First and the Fourth Defendants did not record as advance from the Plaintiff;
(m) By 2012 it was in default again as the special purpose vehicle had failed to complete the project it was meant to for the purposes of repaying the 2006 loan as restructured;
(n) A further restructuring was done with the Third Defendant. The First Defendant had also induced the Plaintiff to obtain four ter
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