(DELIVERING JUDGMENT OF THE COURT)

I APPEAL

[1] On 1 December 2008, we allowed the appeal by the appellants ("the plaintiffs") against the decision of the learned High Court judge.

[2] We now give our grounds.

[3] Unless otherwise stated, a reference hereinafter to a section is a reference to that section in the Companies Act 1965.

II FACTUAL BACKGROUND

[4] The defendant is a private exempt company incorporated on 7 June 1972.

[5] The plaintiffs were the majority members of the defendant's board of directors from 1985 until 25 August 2000 ie, three days before the filing of the originating summons on 28 August 2000.

[6] On or about 25 August 2000, at an annual general meeting of the respondent (the defendant), two additional directors were appointed to the defendant's board of directors.

[7] The defendant had vehemently objected to the plaintiffs' application vide the originating summons, seeking an order to inspect the accounting and other records of the defendant by a qualified auditor pursuant to s. 167(6) of the Companies Act 1965.

[8] After hearing submissions, the learned judge sustained the defendant's objection and dismissed the plaintiffs' originating summons. Hence, the plaintiffs' appeal herein.

III. BURDEN OF PROOF

[9] It is settled law that the defendant, having resisted the plaintiffs' right to inspect the accounting and other records of the defendant, bears the burden of proving that the plaintiffs' right is being, or will be, exercised for an improper purpose: Australian Metropolitan Life Assurance Co Ltd v. Lire & Ors [1923] 33 CLR 199, per Isaacs J; and Wuu Khek Chiang George v. ECRC Land Pte Ltd [1999] 3 SLR 65 CA, per LP Thean JA.

[10] It is for the defendant to show 'clear proof and to satisfy the Court 'affirmatively' that the grant of the right of inspection would be for a purpose detrimental to the interests of the company. There must be a 'real ground' that the right would be abused and that substantial harm would be caused to the company thereby: Wuu Khek Chiang George, supra.

[11] There is no burden on the plaintiffs as directors to show any particular reason for their request for inspection. This will ordinarily be assumed: Molomby v. Whitehead & Australian Broadcasting Corp [1985] 63 ALR 282; and Wuu Khek Chiang George, supra.

[12] Reverting to the instant appeal, it is to be noted that on this issue, the decision of the learned judge is that the defendant had not affirmatively discharged the burden of proof, as no real ground has been positively asserted.

[13] In our judgment, the learned judge is correct. It is therefore not surprising that the defendant has preferred no appeal therefrom.

IV. THE RIGHT TO INSPECT

[14] The right of the plaintiffs as directors to inspect the defendant's accounting and other records is governed by specific statutory provisions, vizs. 167(1), (3) and (6), expressed in the following words:-

"PART VI

ACCOUNTS AND AUDIT

DIVISION 1

ACCOUNTS

Accounts to be kept

167. (1) Every company and the directors and managers thereof shall cause to be kept such accounting and other records as will sufficiently explain the transactions and financial position of the company and enable true and fair profit and loss accounts and balance sheets and any documents required to be attached thereto to be prepared from time to time, and shall cause those records to be kept in such manner as to enable them to be conveniently and properly audited.

(1A) ............

(2) ..............

(3) The records referred to in subsection (1) shall be kept at the registered office of the company or at such other place in Malaysia as the directors think fit and shall at all times be open to inspection by the directors.

(4) .............

(5) .............

(6) The Court may in any particular case order that the accounting and other records of a company be open to inspection by an approved company auditor acting for a director, but only upon an undertaking in writing given to the Court that information acquired by

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