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2025 MarsdenLR 1349
HIGH COURT MALAYA KUALA LUMPUR
ANDREW KAM TAI YEOW – Appellant
Versus
RAUB MINING & DEVELOPMENT COMPANY SDN BHD & ORS – Respondent
[Originating Summons No: WA-24NCC-396-07-2023]
A company may exercise a lien over fully paid shares if permitted by its articles of association, and a judgment debt can be validly assigned. Enforcement requires compliance with stipulated procedures.
Headnote:(A) Civil Law Act 1956 - Companies Act 2016 - Sections 111(1) and 124 - Articles of Association - Lien on Shares - Court dismissed the Plaintiff's originating summons seeking to prevent the Defendants from exercising a lien over the Plaintiff's Share due to unpaid costs amounting to RM67,600.00 - The lien was found lawful and enforceable pursuant to articles 21 and 22 of the 1st Defendant's AA, which allows a lien over all shares for debts owed by shareholders, including fully paid shares. (Paras 22, 37)
(B) Assignment of Debt - Court held that a judgment debt can be assigned to another person and that the Plaintiff's debt was effectively assigned to the 1st Defendant by the 2nd Defendant. (Paras 12, 13)
Facts of the case:
The Plaintiff owned shares in various Defendants and sought to restrain the Defendants from exercising a lien over the Plaintiff's Share in the 1st Defendant due to an outstanding debt of RM67,600.00, arising from court costs. (Paras 1-9)
Findings of Court:
The court concluded that the 1st Defendant was entitled to exercise a lien over the Plaintiff's Share under its articles, and the lien could be enforced through a sale of the share if the debt remained unpaid. (Paras 36, 38)
Issues: Whether the 1st Defendant could lawfully exercise a lien over the Plaintiff's fully paid shares and whether an assignment of debt was valid. (Paras 10, 18, 20)
Ratio Decidendi: The court reasoned that the provisions allowing a lien over fully paid shares are enforceable as per the company’s constitution and that the Plaintiff's debts were validly assigned. (Paras 22-23, 36)
Result: The originating summons was dismissed, and costs were awarded against the Plaintiff amounting to RM250,000.00 to be paid within 14 days. (Paras 38, 40)
| Table of Content |
|---|
| 1. plaintiff seeks to restrain lien exercise (Para 1) |
| 2. factual background of shares and debts (Para 3 , 4 , 5 , 6 , 7 , 8) |
| 3. plaintiff claims lien exercise is unlawful (Para 9) |
| 4. main issue on lien over shares assessed (Para 10 , 32) |
| 5. assignments of debts by 2nd defendant are valid (Para 12 , 18 , 21 , 24) |
| 6. precedent on lien exercise over goods distinguished (Para 27 , 28 , 30) |
| 7. lien enforcement through contract permitted (Para 35 , 36) |
| 8. dismissal of originating summons and cost orders (Para 38 , 39) |
A. Introduction
[1] By the originating summons, the Plaintiff sought to restrain the Defendants from exercising a lien that the 1st Defendant claimed to exercise over shares held by the Plaintiff in the 1st Defendant.
[2] After considering the evidence before the court and hearing counsel's submissions, the court dismissed the originating summons, for the reasons set out below.
B. Background Facts
[3] The Plaintiff owns the following shares in the Defendants:
a. One share in the 1st Defendant ("Plaintiff's Share in the 1st Defendant");
b. One share in the 3rd Defendant;
c. 18,750 shares in the 4th Defendant;
d. One share (jointly held with three other individuals) in the 5th Defendant; and
e. One share (jointly held with three other individuals) in the 6th Defendant,
(collectively, the "Plaintiff's Shares in the Defendants").
[4] The 2nd Defendant is a wholly owned subsidiary of the 1st Defendant. The 6th Defendant is a shareholder of United Raub Oil Palms Sdn Bhd ("UROP"). The 3rd, 4th and 5th Defendants and UROP are shareholding vehicles in the 1st Defendant.
[5] The dispute that is the subject matter of this action began when the 1st Defendant issued a letter dated 21 June 2023, demanding the amount of RM20,800.00 due by the Plaintiff to the 1st Defendant. The amount is due pursuant to an order of court for the payment of costs by the Plaintiff. The 1st Defendant notified the Plaintiff that it would forfeit the Plaintiff's Share in the 1st Defendant, under arts 21 and 22 of the 1st Defendant's articles of association ("1st Defendant's AA"), if the said amount is not paid by the Plaintiff.
[6] The Plaintiff responded by a letter dated 4 July 2023, denying some of the allegations made in the 1st Defendant's letter dated 21 June 2023. However, the Plaintiff proceeded to pay RM20,800.00 to the 1st Defendant, on a without prejudice basis.
[7] The Plaintiff then received another letter, dated 10 July 2023, this time from the 2nd Defendant notifying the Plaintiff of costs amounting to RM41,600.00 which was awarded in favour of the 2nd Defendant against the Plaintiff in various court proceedings. The 2nd Defendant informed the Plaintiff that the amount due to the 2nd Defendant had been assigned to the 2nd Defendant's parent company, the 1st Defendant, with immediate effect.
[8] Subsequently, by a letter dated 12 July 2023, the 1st Defendant informed the Plaintiff that he owed the 1st Defendant RM67,600.00 (including the RM41,600.00 assigned by the 2nd Defendant to the 1st Defendant) (collectively, the "Plaintiff's Debt"), being costs awarded in various court proceedings. The 1st Defendant notified the Plaintiff that it had a lien over the Plaintiff's Share in the 1st Defendant, and it would forfeit and sell the share, if the Plaintiff's Debt is not settled by 26 July 2023. The 1st Defendant claimed that it has the power to enforce its right in this manner, pursuant to arts 21 and 22 of the 1st Defendant's AA.
[9] The Plaintiff argued that it is unlawful for the 1st Defendant and/or the other Defendants to forfeit and sell the Plaintiff's Share in the 1st Defendant on the basis of a lien arising from the non-payment of the Plaintiff's Debt. The Plaintiff filed the originating summons to prevent the Defendants from enforcing their rights over the Plaintiff's Share in the 1st Defendant.
C. Considerations And Findings
[10] The main issue considered by the court is whether the 1st Defendant can exercise a lien over the
