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2014 MarsdenLR 1114

HIGH COURT MALAYA KUALA LUMPUR
AUSPICIOUS JOURNEY SDN BHD – Appellant
Versus
EBONY RITZ SDN BHD & ORS – Respondent
[Originating Summons No: 24NCC-189-06-2013]



Court retains discretion to join parties in corporate oppression claims where their actions intersect with alleged misconduct, particularly where they are directors involved in the management of the company.

Headnote:(A) Companies Act 1965 - Section 181 - Application to strike out parties - The 5th, 6th, 8th and 9th defendants were alleged to have engaged in acts that infringed the rights of the plaintiff and the target company - Courts have discretion to join parties when their participation is relevant to the determination of matters in dispute - Defendants are directors of the company in question and should remain parties to ensure complete adjudication of the case. (Paras 22-30)

(B) Judicial discretion - Court retains the authority to strike out parties deemed unnecessary, especially when the relief sought against them is unlikely to be granted based on the facts presented. (Paras 16-20)

(C) Oppressive conduct - Relief under Section 181 is primarily designed to address issues between majority and minority shareholders, emphasizing the necessity of naming relevant parties in oppression claims. (Paras 9-11)

Table of Content
1. background and claims related to the parties involved. (Para 2 , 3 , 4 , 5 , 6 , 7 , 8)

[1] Enclosure (12) is the 5th, 6th, 8th and 9th defendants' ("the defendants") application pursuant to O 15 r 6(2)(a) of the Rules of 2012 (" ROC ") for an order that the 5th, 6th, 8th and 9th defendants be struck out as parties of the originating summons.

Background Facts

[2] Before giving my views on the defendants application, it is necessary first to outline the background facts of the plaintiff's claim.

[3] The proceeding herein is brought pursuant to s 181 of the Companies Act 1965 .

[4] The subject matter of the suit is the 1st defendant ("Ebony Ritz"), in which the plaintiff ("Auspicious Journey") and the 2nd defendant ("Hoe Leong") holds 20% and 80% of the shares respectively in Ebony Ritz.

[5] Ebony Ritz is a special purpose joint venture vehicle utilised by both Hoe Leong and Auspicious Journey for purposes of their investment in Semua International Sdn Bhd ("Semua International").

[6] The crux of Auspicious Journey's complaint involves various acts undertaken by, inter alia, Hoe Leong which infringes upon the rights of Ebony Ritz and Auspicious Journey. The acts of Hoe Leong are also alleged to be attributable to its Directors.

[7] In particular, the acts complained of specifically against Hoe Leong (attributable to them as directors of Hoe Leong) in the originating summons and plaintiff's first affidavit collectively (the "181 Action"), may be summarised as follows:

(1) That Hoe Leong had expropriated the rights and interests of Ebony Ritz inter alia in relation to:

(a) Ebony Ritz's 2% Call Option;

(b) Ebony Ritz's rights and interests pertaining to the Profit Shortfall Guarantee;

(c) Auspicious Journey's Call Option.

(2) The 5th, 6th, 8th and 9th defendants knew and/or ought to have known of:

(a) Hoe Leong's interest and investment in Ebony Ritz and the underlying agreements;

(b) Auspicious Journey's rights and interest and investment in Ebony Ritz;

(c) The rights and interests of Ebony Ritz including the affairs thereto.

[8] The following reliefs have also been claimed against the Hoe Leong Directors including:

(a) Declaratory reliefs that inter alia the Hoe Leong Directors:

(i) Are conducting the affairs of Ebony Ritz in a manner that is oppressive to and/or in disregard of Auspicious Journey's interest as a member of the Ebony Ritz.

(ii) Have procured and/or caused to be done and/or threatening to procure or cause to be done to Ebony Ritz which has had and/or will unfairly discriminate against or which is or will be otherwise prejudicial to Auspicious Journey as a member of Ebony Ritz.

(b) An inquiry as to damages, and, an order that inter alia the Hoe Leong Directors do pay Ebony Ritz such damages as suffered and assessed, and with interest.

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