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2013 MarsdenLR 88
COURT OF APPEAL, PUTRAJAYA
CAPPING CORPORATION LIMITED & ORS – Appellant
Versus
AQUAWALK SDN BHD & ORS – Respondent
[Civil Appeal No: W-02-948-2009]
A party cannot waive rights under a contract unless such waiver is explicitly stated; arbitration clauses must be respected even after settlement agreements unless clearly superseded.
Headnote:(A) Arbitration Act 2005 - Clause 17.1 of Shareholders Agreement - Appeal concerning entitlement to initiate arbitration proceedings - High Court ruling that appellants lacked standing due to alleged waiver or abandonment of rights under the Shareholders Agreement. (Paras 1-34)
(B) Legal principle of interpretation of written agreements - Court must give effect to clear and unambiguous language of the parties' agreement, unless clearly demonstrated otherwise. (Paras 21-27)
(C) Minimal interference doctrine - Courts should refrain from determining jurisdictional issues if resolved by the arbitration agreement. (Paras 30-32)
Facts of the case:
Disputes arose among shareholders of a company regarding rights under a Shareholders Agreement amid allegations of minority oppression and trust issues. High Court concluded appellants could not arbitrate due to ceased shareholding and purported abandonment of rights.
Findings of Court:
Shareholders Agreement remains binding; the High Court misconstrued the Settlement Agreements, which did not indicate termination of the Shareholders Agreement.
Issues: Whether the High Court erred in finding the Shareholders Agreement lapsed and whether parties waived their rights under it.
Ratio Decidendi: The court found that the three Settlement Agreements did not supersede or terminate the Shareholders Agreement; hence the arbitration clause remains enforceable.
Result: Appeal allowed, High Court decision set aside.
| Table of Content |
|---|
| 1. dispute inception and arbitration context (Para 1 , 3 , 4 , 5 , 6 , 7 , 8 , 9) |
| 2. overview of appeal (Para 2) |
| 3. claims related to share ownership and rights (Para 10 , 12 , 15) |
| 4. originating summons and legal grounds (Para 11) |
| 5. parties' background and initial disputes (Para 13 , 14) |
| 6. high court's orders and limitations on arbitration (Para 16 , 17) |
[1] This is an appeal against the decision of the High Court in which the learned judge held that the appellants are not entitled to initiate arbitration proceeding under cl 17.1 of the Shareholders Agreement dated 11 October 2002 entered between the 1st appellant and the 4th respondent (Shareholders Agreement). The decision stems from an application by the respondents in the form of an Originating Summons.
[2] On 7 March 2013 we heard the appeal and after due consideration by us, we allowed the appeal for reasons set out below.
Background Facts
[3] The 1st appellant and the 4th respondent on 31 October 2001 incorporated Aquawalk Sdn Bhd as the original shareholders of one share each with a view of implementing a joint venture investment plan of owning and operating an Aqua-Marine Discovery Centre in Kuala Lumpur.
[4] The relationship between the 1st appellant and the 4th respondent in the joint venture investment is governed by and encapsulated in the Shareholders Agreement.
[5] At that time, the shareholding of the 1st appellant and 4th respondent were respectively 50,000 shares each. By two separate supplemental Shareholders Agreements dated 24 June 2003 and 24 October 2003 respectively, the authorised and issued share capital of the 1st respondent was increased from 100,000 ordinary shares to 50,000,000 ordinary shares of RM1.00 each.
[6] After the increase of the authorised and issued capital in the 1st respondent, the registered shareholders of the 1st respondent on or about the end of 2004 were as follows:
Name
Number of shares
Capping Corporation (2003) Limited (2nd appellant)
2,400,000
Waiata Holdings (AKL) Limited (3rd appellant)
800,000
Aquawalk International Limited (4th respondent)
16,320,000
Mace Consulting Ltd
1,600,000
Alistair Ian Thomson
800,000
Sarah Frances Thomson
800,000
Vista Aspen Sdn Bhd
1,600,000
Sundry Investments Malaysia Ltd
3,200,000
Marinescape Thailand Ltd
480,000
TBS Franchise Sdn Bhd (2nd respondent)
4,000,000
[7] However, disputes arose between the 1st, 2nd, 3rd appellants and the 4th respondent which culminated in the following legal suits:
(a) The 1st, 2nd, 3rd appellants on 2 December 2004 initiated legal proceeding against the 4th respondent and nine others on the ground that they had been oppressed as minority shareholders in the 1st respondent.
(b) The 4th respondent also initiated legal proceeding against the 1st and 2nd appellants in the New Zealand Courts. This suit was founded on the following contentions:
(i) that the shares held by the 4th respondent in the 1st respondent are on trust for and on behalf of Philip Mark Bell-Booth who is the principal of the 1st appellant.
(ii) that the proceeds of the sale of shares in the 1st respondent by the 4th respondent are to be divided between Bell-Booth and one Terence O'Boyle, who is the principal of the 4th respondent.
[8] The New Zealand Court on 25 June 2005 dismissed the 4th respondent's suit. The learned judge there held that the proper forum to adjudicate the disputes between the parties is by way of arbitration in Malaysia premised on the existence of an arbitration clause (cl 17.1) in the Shareholders Agreement.
[9] Pursuant to the New Zealand Court's ruling, the 1st , 2nd and 3rd appellants initiated arbitration against the 4th respondent by way of a notice of arbitration dated 4 July 2005 (2005 notification), which concerns, among others, the following disputes:
(a) 4th respondent's denial that it was holding shares on trust for the 1st to 3rd appellants;
(b) Breaches of the Shareholders Agreement by the 4th respondent; and
(c) 4th respondent's threat to use the voting powers attached to the shares held
