JUDGMENT

Noor Hisham Ismail J:

Introduction

[1] This is a Writ action by the plaintiffs ("P") against the defendants for recovery of payment for goods sold and delivered by the plaintiff to the 1st defendant (company) ("D1") and for the 2nd, 3rd and 4th defendants ("D2", "D3" and "D4" respectively) who are the 1st defendant's directors to assume liability for the said payment.

[2] On 15 July 2020, Judgment in Default of Appearance ("JID") was allowed to be entered against D1 since the nature of claim is only monetary in nature.

[3] Trial then commenced in respect of P's claims against D2, D3 and D4.

[4] At the conclusion of the hearing, upon D1's corporate veil being successfully lifted, judgment was entered against D2, D3 and D4 for them to assume liability on a jointly and severally basis towards the judgment sum, interests and costs entered against D1 under the JID.

[5] D2, D3 and D4 have since filed their appeal to the Court of Appeal against the said decision of this Court .

Salient Facts

[6] P's claimed that between the period of 15 November 2019 until 14 March 2020, they have at the request of the defendants supplied seafood (as P's business is in the supply and sale of seafood) to them for a sum of RM139,756.10 which is corroborated by P's statement of accounts and the respective delivery orders.

[7] The payment terms for the supply of the seafood would be cash on delivery.

[8] D1 had acknowledged the receipt of the seafood supplied by P's as could be seen on P's delivery orders which also contains the value of each order and delivery made.

[9] P's case is that the invoices and/or delivery orders were never disputed by D.

[10] D's had then refused and/or failed to pay the amount outstanding despite an official demand being made by P's solicitors.

[11] It is also P's pleaded case that D2, D3 and D4 are the minds controlling the operations and business of D1. In other words, they are not independent and separate from D1.

[12] P's pleaded case is also that this is a fit and proper case for D1's corporate veil to be lifted so as to render D2, D3 and/or D4 to be made jointly and severally liable for D1's debts owing to P's.

[13] D1 did not enter an appearance leading to JID being obtained against it by P's.

[14] D2, D3 and D4 denied any indebtedness to P's and that any amount due and owing would be D1's responsibility. Furthermore, they sought to distance themselves from D1 which according to them is a separate legal entity and that they are not involved with any of the transactions involving D1 and P's. Accordingly, they claim they are not liable to P's claim and that D1's corporate veil ought not to be lifted.

[15] During trial, P only produced one witness that is Francis Choong Wen Chung (P2) as SP1, whereas the defendants produced two witnesses, who are Loh Wee Lon as SD1 and Yu Sze Hou (D4) as SD2.

Lifting of D1's Corporate Veil

[16] P's from the very beginning had consistently built the foundation of their case behind the need to lift D1's corporate veil. A perusal of P's amended statement of claim shows that P's grounds to lift D1's corporate veil is based on equitable fraud, avoidance of existing obligation or abuse of corporate legal personality. This lifting of the corporate veil is the fundamental issue in this trial although there were other issues to be tried.

[17] To begin with, the doctrine of corporate personality also known as the separate legal entity principle treats a company as an entity separate from its members.

[18] Refer to Lai Fee & Anor v. Wong Yu Vee & Ors; [2023] 3 MLJ 503; [2023] 4 CLJ 1 where it was held by the Federal Court at p 14 that:

"An action under s 540 of the CA 2016 underpins the existence of the statutory exception to the common law doctrine of corporate personality, also known as the separate legal entity principle: that the company is treated as an entity separate from its members. This doctrine was propounded in the landmark judgment of the House of Lords in Aron Salomon v. A Salomon & Co Ltd [187