Back
2024 MarsdenLR 3211
COURT OF APPEAL PUTRAJAYA
CHEE HOCK LEONG & ANOR – Appellant
Versus
TEH YONG KHOON & ORS – Respondent
[Civil Appeal No P-02(NCvC)(W)-1548-08/2022]
The court affirmed that for a representative action to succeed, there must be a common interest and grievance among the parties, which the Plaintiffs failed to establish.
Headnote:(A) Contracts Act 1950 - Section 10 - Breach of contract - Plaintiffs claimed 10% equity in the 3rd Defendant based on an alleged oral promise by the Defendants - High Court Judge dismissed the claim, ruling no common interest among Plaintiffs and failed to prove the existence of an oral contract - The Plaintiffs failed to fulfill the requirements for a representative action as stipulated in O 15 r 12 of the Rules of Courts 2012. (Paras 10, 12, 25, 26)
(B) Representative Action - Requirements for a representative action include common interest, common grievance, and beneficial relief for all members - Plaintiffs did not establish a common interest, as several members of the purported Class had no grievance against the Defendants. (Paras 20, 22, 24)
Facts of the case:
Plaintiffs, former employees of a public listed company, claimed entitlement to 10% equity in the 3rd Defendant based on an alleged oral promise made by the Defendants during meetings related to the privatization of the company. (Paras 1, 4, 6)
Findings of Court:
The Plaintiffs failed to prove that they shared a common interest or grievance with the purported Class, and there was no concluded oral contract due to unfulfilled terms and conditions. (Paras 22, 24, 26)
Issues: Whether the Plaintiffs fulfilled the requirements for a representative action and whether there was a binding oral contract between the parties. (Paras 11, 12)
Ratio Decidendi: The court ruled that the Plaintiffs did not meet the conditions for a representative action, as there was no common interest among the members of the Class, and the oral agreement lacked essential elements of a valid contract. (Paras 24, 26)
Result: Appeal dismissed, with costs awarded to the Defendants. (Paras 43)
JUDGMENT
A. Introduction
[1] This is an appeal by the Plaintiffs in the court below against the decision of the learned High court Judge (HCJ) in dismissing their claim against the Defendants. The Plaintiffs' cause of action against the Defendants is forthe breach of contract by way of an oral promise to allocate 10% of the shares in the third Defendant to the top management of the third Defendant.
[2] The Plaintiffs were the former employees of a public listed company, Eng Teknologi Holdings Sdn Bhd (ETHB) that went into a privatization exercise and was subsequently acquired by the third Defendant. The 2nd Plaintiff is also a director of the 3rd Defendant and ETHB.
[3] The 1st and 2nd Defendants are shareholders and directors of the 3rd Defendant. They are the majority shareholder, holding between them 73%of the ordinary shares.
[4] The Plaintiffs brought this representative or class action for their benefit as well as the benefit of the 3rd Defendant's top management (the "Class"). Their claim for the 10% shares in the 3rd Defendant is based on the alleged oral promise made by the 1st and 2nd defendants. Hence, in the re-amended statement of claim, the reliefs sought by the Plaintiffs are:
i. a Declaration that the Class, including the Plaintiffs are entitled to 10% equity in the 3rd Defendant to be set aside and transferred from the 1st and 2nd Defendants' shareholding in the 3rd Defendant;
ii. A consequential order directing the 1st and/or 2nd Defendants to take such steps and to transfer such number of shares in the 3rd Defendant equivalent to 10% equity in the 3rd Defendant to the Plaintiff to be held in trust for the benefit of the Class;
iii. An injunction restraining the Defendants whether by themselves individually or collectively or by their agents, employees or servants from undertaking any corporate exercise involving the 3rd Defendant which will have the effect of either diluting the 10% equity of the Class in the 3rd Defendant or affecting adversely the value of such shares;
iv. Alternatively, an order that the shares be valued by a reputable firm of accountants nominated by the court and thereafter an order that the 1st and/or the 2nd Defendants compensate the Class by paying the 1st and 2nd Plaintiffs the value of 10% equity in the 3rd Defendant as at the date of filing this action to be held on trust of the Class;
v. Alternatively, damage for breach of the oral promise and agreement and/or obligations against the 1st and 2nd Defendants;
vi. Exemplary damages against the 1st and 2nd Defendants;
vii. Interest on such compensation or damages at such rate and for such period as the court deems fit;
viii. Costs; and
ix. such other and further relief as the court deems fit.
[5] In this judgement, the parties will be referred to as they were before the court below.
B. Summary Of The Plaintiffs' Case
[6] The background facts of this appeal can be gleaned from the written submission of learned counsels which we adopt herein and can be summarized as follows. The 1st and 2nd Defendants were the employers of ETHB prior to the privatization exercise. Prior to the privatization of ETHB, the 1st Defendant and his mother, Datin Low Yeow Siang, were the substantial shareholders of ETHB. ETHB decided to go private in 2011,leading to the execution of a Sale of Business Agreement between the 3rd Defendant and ETHB on 27 August 2011. Under this agreement, all business and all assets of ETHB were acquired by the 3rd Defendant at the agreed price of RM2.00 per ETHB shares totaling RM244million. The agreed price was satisfied by way of cash of RM187.6 million and by way of a Rollover/Deferred Amount of RM56.4 million. Subsequent to this Sale of Business Agreement, the 1st and 2nd Defendants became the 100% shareholders of the 3rd Defendant.
[7] On 24 April 2012, during ETHB's 1st Quarter 2012 Meeting of Heads in Bangkok, the issue of privatization was brought up by the 1st Defendant in the power point slide presentation as pa
