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2021 MarsdenLR 4274
HIGH COURT SABAH & SARAWAK SANDAKAN
LEE YEE WUEN – Appellant
Versus
SEEK KENG MEE & ORS – Respondent
[Originating Summons No: SDK-24NCvC-6/3-2020]
The court maintains discretion in granting Erinford injunctions pending appeals, considering serious issues for trial, balance of convenience, and potential reversibility of the initial ruling.
Headnote:(A) Companies Act, 2016 – Section 208 – Erinford injunction – Defendants sought injunction against enforcement of court order granting interim injunction in favor of plaintiff, pending appeal – Court affirmed grant of injunction as balance of convenience favored the plaintiff, with issues regarding share transfers and director appointments being crucial for trial. (Paras 26, 50, 64)
(B) Principles for Erinford injunctions established – Court highlighted that it retains discretion in deciding cases for injunction pending appeal, considering potential for judgment to be reversed, and whether to maintain status quo. (Paras 26, 51)
Facts of the case: The plaintiff challenges the validity of shared transfers and director appointments following father's death and asserts rightful ownership of shares, claiming fraudulent transfer from a trustee to the first defendant. (Paras 6-13)
Findings of Court: Last order’s enforcement is not stayed, as defendants failed to establish strong basis for their claims and the balance of convenience tilts towards the plaintiff given potential unlawful share transfers. (Paras 38, 64)
Issues: Legality of shares transferred to the first defendant, validity of the first and second defendants’ appointments as company director and managing director. (Paras 24-25)
Ratio Decidendi: The court reaffirmed the importance of full trials in matters concerning share transfers and company management, ruling that interim measures were necessary to protect the plaintiff's interests pending a full review. (Paras 24, 50)
Result: Application for Erinford injunction dismissed, costs awarded to the plaintiff. (Paras 64)
JUDGMENT
Introduction
[1] The matter before me is a Notice of Application by the 1st and 2nd defendants (hereinafter referred to as "the defendants" unless specifically specified otherwise) for an Erinford injunction specifically in the following terms:
"An Erinford Injunction and/or an Erinford Stay restraining the plaintiff, whether by herself, her servants or agents or otherwise howsoever, from whether acting by herself and/or her servants or agents or any of them or otherwise, whether jointly or severally or any of them or otherwise howsoever in the enforcement and/or the execution and/or operation of the Order of the court dated 18 September 2020 until the full and final disposal of the 1st and 2nd defendants' appeal to the court of Appeal vide the Notice of Appeal dated 22 September against the said Order dated 18 September 2020, granting the plaintiff's application for an interim injunction, except by leave of this Honourable court."
[2] Earlier on, the plaintiff had filed an application for injunction against the defendants under encl 13 for the following reliefs, the same of which were granted by this court on 18 September 2020 ("the 18 September 2020 Order"):
"1. An interim injunction restraining the 2nd defendant from acting, proclaiming or holding himself out as the Managing Director of Perfect Oil Resources (Sabah) Sdn Bhd ("the Company") or convening, calling or holding any Board of Directors' meeting pending the final disposal of this Suit by the court;
2. An interim injunction restraining the 1st defendant from acting, proclaiming or holding herself out as a director of the Company pending the final disposal of this Suit by the court;
3. An interim injunction restraining the 2nd defendant whether by himself or by his servants and/or agents or howsoever from blocking or preventing the plaintiff from entering the office of the Company situated at Block 15, Lot 148, 1st Floor, Prima Square, Phase II, Mile 4, North Road, 90000 Sandakan, Sabah and the Company's oil palm estate situated at Country Lease No 085311146, Labuk/Sugut, Ulu Sapa Paya, Beluran, Sabah respectively;
4. Such further or ancillary and consequential orders and/or directions be made or given that this Honourable court deems just and expedient; and
5. That the costs of and occasioned by this application to be costs in the cause."
[3] The defendants have filed a Notice of Appeal against the 18 September 2020 Order and as at the date hereof, the appeal is still pending.
The Originating Summons
The Parties
[4] The 4th defendant ("the Company") was incorporated by one Lee Poh Sin ("the Deceased") who was the father of the plaintiff and the 2nd defendant. The Deceased who was the Managing Director of the Company passed away on 10 September 2018.
[5] The plaintiff holds 825,000 shares in the Company. The plaintiff claims to have been given by the position of "Assistant Managing Director" in the Company by the Deceased with effect from September 2011.
[6] The 1st defendant is the wife of the 2nd defendant and was appointed as a director of the Company on 1 October 2018. The 1st defendant is also the registered shareholder of 900,000 shares ("the said shares") in the Company. The plaintiff is disputing the transfer of the said shares to the 1st defendant alleging that they had been fraudulently transferred to the 1st defendant from the 3rd defendant who was holding the said shares in trust for the Deceased. The plaintiff is also challenging the validity of the 1st defendant's appointment as a director of the Company.
[7] The 2nd defendant is a director and holds 450,000 shares in the Company. The 2nd defendant was appointed as the Managing Director of the Company with effect from 13 December 2018. This appointment is also being challenged by the plaintiff in this action.
[8] The 3rd defendant had previously and until 5 October 2018 when they were transferred to the 1st defendant, held the said shares under Certificate No(s) 4, 7 and 10. Initially, th
