Atan Mustaffa Yussof Ahmad J:

BROAD GROUNDS OF DECISION

(Enclosure 6)

[1]Enclosure 6 is allowed. The First Defendant has successfully demonstrated that the Plaintiff’s action against her is unsustainable and, accordingly, should be struck out. The Plaintiff’s action against the First Defendant is frivolous and/or vexatious as well as lacking any reasonable cause of action.

Lack of pleadings on piercing the corporate veil

[2]In weighing the respective submissions of the parties, I conclude that the Plaintiff has failed to sufficiently plead the basis to pierce the corporate veil of the Second Defendant so as to hold the First Defendant, Lyanna binti Mohd Johan, personally liable.

[3]The Plaintiff’s claim arises from the Settlement and Non-Disclosure Agreement dated 19.05.2023 (“Settlement Agreement”). It is not disputed that this Settlement Agreement was entered into only between the Plaintiff, CBM Berhad, and the Second Defendant, VCAE Sdn Bhd. Nowhere in the terms of the said agreement was any obligation imposed on the First Defendant personally. Rather, the contractual responsibilities lie solely with the Plaintiff and the Second Defendant.

[4]It is settled law that a director executing an agreement on behalf of a company does so only as an agent of that company, and so incurs no personal liability. The legal principles in Salomon v Salomon Yee Weng Kai v Yam Kong Seng & Anor Ahmad Rizal bin Umar v Klee Property Development Sdn Bhd & Anor Abdul Manaf Mohd Ghouse v Nusantara Timur

[5]Realising the constraint in suing the First Defendant pursuant to the Setlement Agreement for lack of privity, the Plaintiff seeks to lift the corporate veil against the First Defendant “for making fraudulent misrepresentations” and hold her personally liable for the alleged breaches of the Settlement Agreement purportedly committed by the Second Defendant. The crux of the Plaintiff’s argument is predicated on the assertion that the First Defendant, through her singular role and representation, engaged in deceptive practices that induced the Plaintiff into entering the said agreement, thus warranting the lifting of the corporate veil.

[6]The doctrine of lifting or piercing the corporate veil is an exceptional and cautiously applied principle, reserved for circumstances where the separation of the corporate entity from its controllers is misused to perpetrate fraud, evade legal obligations, or conceal true ownership. It is well-established jurisprudence that the corporate veil can only be pierced under special circumstances where it can be shown that the company is being used as a facade to conceal the true facts of the matter, essentially when the corporate form is abused for illegitimate purposes.

[7]It is important to note the fundamental legal principle of privity of contract in the context of lifting the corporate veil, as highlighted in the case of Ahmad Rizal bin Umar v Klee Property Development Sdn Bhd, which requires a direct contractual relationship for the imposition of liability on a third party to the contract. The mere act of a director signing an agreement on behalf of a corporation does not establish such privity for the director personally. Therefore, this does not automatically render the director liable for any alleged breaches of the said agreement.

[8]There is also a notable absence of any specific pleading by the Plaintiff that directly implicates the First Defendant in fraudulent trading or any deceitful conduct that would necessitate lifting the corporate veil under Section 540(1)Companies Act 2016Perman Sdn Bhd & Ors v European Commodities Sdn Bhd & Anor Azhar bin Harun v Dato’ Muthukumar a/l Ayarpadde & Ors

[9]Critically, the Plaintiff’s reliance on the concept of the First Defendant being the ‘alter ego’ and/or ‘agent of controller’ of the Second Defendant is insufficiently substantiated within its pleadings. The jurisprudence mandates a high threshold for such a claim, necessitating concrete evidence and precise pleadings th