JUDGMENT

Atan Mustaffa Yussof Ahmad J:

(Enclosure 276)

[1] Before the court is an application to stay proceedings in a statutory derivative action pending the determination of a separate oppression action commenced against the company and its minority shareholder, where both actions arise from an acrimonious shareholder dispute in a joint venture company. The key issues are whether there exist special circumstances warranting a stay of proceedings, and whether the oppression action would provide a more comprehensive resolution of the disputes between the shareholders, having regard to the fact that trial of the derivative action has been ongoing for nine days with substantial evidence already adduced.

Background Facts

[2] This matter concerns Nautilus Tug & Towage Sdn Bhd ("NTT'), a special purpose joint venture company with two shareholders: Azimuth Marine Sdn Bhd ("AMSB") holding 80% of shares and Nautical Supreme Sdn Bhd ("NSSB") holding 20% of shares. NTT's sole business is to undertake the Harbour Tugs Services Agreement dated 11 April 2013 with Vale Malaysia Minerals Sdn Bhd ("Vale") for a period of 15 years, of which approximately 4.5 years remain.

[3] On 27 April 2016, Dato' Seri Timor Shah Rafiq ("DST'), a director of NTT, filed an application for an inspection order to examine NTT's accounts due to queries regarding the company's financial records. This was granted by the High court.

[4] On 19 October 2016, NSSB commenced arbitration proceedings against AMSB and NTT pursuant to the Arbitration Clause in the Shareholders' Agreement between NSSB and AMSB dated 15 March 2013 ("Shareholders' Agreement'). The arbitration was premised on, among other things, the transfer of 100,000 ordinary shares in NTT by AMSB to the 5th Defendant, Jaya Sudhir, on 16 December 2015. NSSB contended that this transfer breached the Pre-Emption Clause in the Shareholders' Agreement, which led to NSSB's termination of the agreement. In the arbitration, AMSB counterclaimed seeking a declaration to purchase NSSB's shares at a price to be determined by NTT's auditor.

[5] On 7 August 2018, DST filed an application in the Kuala Lumpur High court (WA-24NCC-392-08/2018) seeking leave to commence a derivative action on behalf of NTT. After initial refusal by the High court, leave was granted by the court of Appeal on 21 September 2021, which was subsequently upheld by the Federal court on 3 March 2023.

[6] Following the grant of leave, the present derivative action was commenced. Trial began on 18 June 2024 and as at the date of the hearing of this application has proceeded for nine days, with DST undergoing cross-examination. A further nine days of trial have been fixed.

[7] On 30 October 2024, AMSB filed an originating summons (WA-24NCC-519-10/2024) ("Oppression Action") naming NTT, NSSB, DST, and Dato' Wan Mohamed Yaacob bin Dato' Wan Salaidin ("Dato' Wan") as defendants. On 13 November 2024, the High court ordered that this Oppression Action be converted into a writ action.

[8] On 6 November 2024, AMSB filed an application (encl 276) seeking to stay the derivative action pending the final determination of the Oppression Action. Subsequently, on 27 November 2024, AMSB filed an originating summons seeking to restrain NSSB and NTT from proceeding with the arbitration proceedings.

[9] The arbitration proceedings have been restrained by an ad interim injunction obtained by the 5th Defendant in a separate action, pending his application for leave to appeal to the Federal court.

[10] Over the past eight years, multiple legal proceedings have taken place between the parties. These include the Wrongful Transfer Suits (WA-22NCC-113-03/2018) [Jaya Sudhir Jayaram v. Dato' Seri Timor Shah Rafiq & Ors And Another Case], where the High court granted a mandatory injunction requiring Jaya Sudhir to transfer 100,000 shares back to AMSB. This decision was upheld by the court of Appeal on 25 September 2024, and Jaya Sudhir filed a motion for leave to appeal to the Federal court o