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2025 MarsdenLR 676
COURT OF APPEAL PUTRAJAYA
CJ POLYMERS SDN BHD – Appellant
Versus
SIM CHIN HU & ORS AND OTHER APPEALS – Respondent
[Civil Appeal Nos: W-02(NCC)(A)-2146-11-2022 W-02(NCC)(A)-2148-11- 2022 & W-02(IM)(NCC)-1631-09-2024]
The court held that minority oppression occurred when the management excluded an equal partner from business operations, violating established quasi-partnership expectations.
Headnote:(A) Companies Act 2016 - Section 346 - The High Court found that the actions of the remaining shareholders in removing Sim from management and neglecting his interests constituted oppression. The court acknowledged the existence of a quasi-partnership between Sim and Kerk, thus legitimizing Sim's expectation of managerial participation. (Paras [20], [25], [47], [61])
(B) Quasi-partnership - The court affirmed that a quasi-partnership persisted despite new shareholder admissions. Sim's removal was deemed oppressive as it disregarded his shareholder rights. (Paras [20], [43], [46])
(C) Fiduciary Duty - Allegations of misconduct against Sim were excluded from consideration as they were unproven and subject to a separate suit. (Paras [23], [52])
(D) The court ordered a buyout of Sim's shares with fair value determined by an independent valuer, affirming that his previous privileges were unreasonably revoked. (Paras [29], [62]) (E) Final orders included Sim's reimbursement for advances made to the company and acknowledgment that his prior benefits cannot be unilaterally withdrawn. (Paras [28], [59])
| Table of Content |
|---|
| 1. overview of appeals (Para 1 , 2 , 3 , 4 , 5 , 6) |
| 2. background of cj polymers (Para 8 , 9 , 10 , 11) |
| 3. sim's complaint and allegations (Para 12 , 13) |
| 4. defendants' allegations (Para 14 , 15 , 16 , 18) |
| 5. misconduct and justification for removal (Para 17 , 19) |
| 6. high court's finding on quasi-partnership (Para 20 , 21 , 24) |
| 7. findings on management and benefits (Para 22 , 23 , 25 , 26 , 27 , 28) |
| 8. high court's reliefs granted (Para 29 , 30 , 31) |
| 9. issues of quasi-partnership (Para 32 , 33 , 34 , 40 , 42) |
| 10. partnership decision-making dynamics (Para 35 , 36 , 37 , 41) |
| 11. oppression under companies act (Para 45 , 46) |
| 12. evidential findings on oppression (Para 47 , 48 , 49 , 52) |
| 13. claims against cj polymers (Para 53 , 54 , 56) |
| 14. decision on rm3.5 million claim (Para 59 , 60) |
| 15. justification for buyout order (Para 62) |
| 16. cross-appeals discussion (Para 67) |
Introduction
[1] There are three appeals before us. All the appeals arise from a minority oppression action filed by Sim Chin Hu (Sim). The main issue in the High Court was whether his removal from the management of the company that he co-founded constituted oppression, notwithstanding the fact that there was a pending claim by the company against him for breach of fiduciary duty. The second issue was whether the quasi-partnership arrangement between Sim and his co-founder (Kerk Han Meng) terminated upon the admission of new shareholders. Sim was successful in the Court below.
[2] In Appeal 2146, CJ Polymers Sdn Bhd (CJ Polymers), the company that was co-founded by Sim, is the appellant. It was the 4th defendant in the High Court. An order was made for the company to return some movable properties to Sim. The prayer for CJ Polymers to buy out Sim's shares was the alternative prayer in the oppression action. CJ Polymers was also ordered to buy-out the shares of Sim by the High Court because prior to the hearing, it had made the buyout offer subject to set-off from losses suffered by it due to the alleged misconduct of Sim. The separate suit of CJ Polymers Sdn Bhd v. Sim Chin Hu & Ors [2022] MLRHU 1220 (Civil Suit WA-22NCC-298-07-2020) against Sim for alleged breach of fiduciary duty and misconduct was then pending in another Court. CJ Polymers is appealing against the order to buy-out the shares of Sim.
[3] In Appeal 2148, Kerk Han Meng (Kerk) and Lee Yu Meng (Lee) are the appellants. Kerk holds 48.5 per cent of the shares, whereas Lee holds 3 per cent of the shares in CJ Polymers. They were the 1st and 2nd defendants in the High Court. But on 7 May 2024, Kerk withdrew himself from this appeal insofar as it related to him. Lee continued with her appeal against the decision of the High Court.
[4] In Appeal 1631, the appellant is CJ Polymers. The appeal is against the dismissal of the application of CJ Polymers on 13 September 2024 to make representations and conduct cross-examination in respect of the Deloitte Final Report. The Deloitte Report was prepared pursuant to the orders of the High Court dated 9 November 2022, 12 January 2023 and 8 November 2023, which were to facilitate the buyout order.
[5] The 3rd defendant in the High Court was Eric Kua Chin Wee (Eric Kua). He is not a director of CJ Polymers. But a finding of fact was made by the High Court that he purchased a one-third stake in the company from Sim and Kerk. He discontinued his own appeal (Appeal 2147) on 3 May 2024, and his counsel did not file any submissions. Nonetheless, he remains a respondent in the other appeals.
[6] Sim has filed a notice of cross-appeal in Appeals 2146 and 2148 to vary the reliefs granted to him, particularly in respect of the 1.5 per cent shares of CJ Polymers he had transferred to Lee Yu Meng (Lee). He is appealing for the 1.5 per cent shares to be included in his stake for the purpose of the buyout order.
[7] Pursuant to an order made on 31 January 2023, Appeal 2146 was consolidated with Appeal 2147 and Appeal 2148. However, as said earlier, Appeal 214
