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2026 MarsdenLR 1676
HIGH COURT MALAYA KUALA LUMPUR
NIXON KENNEDY KUMBONG, JC
ONG WEI SHEN & ANOR – Appellant
Versus
LIM ENG SIANG – Respondent
[Civil Appeal No: WA-12ANCvC-176-12/2025]
Important Points
Subject
Corporate Law - Directors' Duties and Insolvency
Act Referred
Insolvency Act 1967: S.8(1)(a)
Companies Act 2016: S.346, S.347, S.465, S.213
Subordinate Courts Act 1948: S.65(1)
Headnote
(B) Insolvency Act 1967 - Section 8(1)(a) - Leave to commence action against a bankrupt - Requirement for a creditor to obtain leave of the Court before proceeding against the person or property of a bankrupt is mandatory and serves as a jurisdictional gateway (Paras 54-59) - Failure to obtain such leave renders the action incompetent and is fatal to the claim (Para 59).
(C) Companies Act 2016 - Section 213 - Fiduciary duties of directors - Fiduciary obligations are prospective and arise only upon appointment (Paras 62, 70) - A director cannot be held liable for acts or omissions occurring before their appointment, as duties of oversight and vigilance do not operate retrospectively (Paras 64, 69) - Obligations to comply with a court order for reinstatement of directors bind the corporate entity rather than individual directors in their personal capacities (Paras 72-73).
(D) Subordinate Courts Act 1948 - Section 65(1) - Jurisdiction of Sessions Court - Common law claims for breach of fiduciary duty by directors fall within the jurisdiction of the Sessions Court, as they are distinct from statutory corporate remedies reserved for the High Court (Paras 26-29, 48).
Facts of the case:
Appellants sued a former director for breach of fiduciary duty, alleging failure to prevent suspicious transactions and failure to comply with a reinstatement order. The suspicious transactions occurred prior to the respondent's appointment as director. The respondent had been adjudged bankrupt, and the appellants had not obtained leave under the Insolvency Act 1967 to commence the action. The lower court struck out the claim, leading to this appeal.
Findings of Court:
The court found that while the lower court erred regarding its own jurisdiction and the application of res judicata, the decision to strike out the claim was ultimately correct. The failure to obtain mandatory leave under the Insolvency Act was fatal, and the claim disclosed no reasonable cause of action because fiduciary duties are not retrospective and the reinstatement order bound the company, not the individual director.
Issues: Whether the striking-out application was procedurally defective for invoking multiple limbs of Order 18 rule 19; whether the Sessions Court had jurisdiction over common law fiduciary claims; whether failure to obtain leave under section 8(1)(a) of the Insolvency Act 1967 was fatal; and whether the claim disclosed a reasonable cause of action.
Ratio Decidendi: Fiduciary duties of a director are prospective and do not attach to conduct occurring before the date of appointment. Furthermore, leave under section 8(1)(a) of the Insolvency Act 1967 is a mandatory statutory requirement; failure to obtain such leave renders a claim against a bankrupt unsustainable and justifies striking out the action.
Result: Appeal dismissed.
JUDGMENT
[1] This appeal concerns the decision of the learned Sessions Court Judge dated 25 November 2025, which allowed the respondent's application to strike out the appellants' claim pursuant to O 18 r 19(1)(a)-(d) and O 92 r 4 of the Rules of Court 2012. The effect of that decision was to bring the appellants' action to an early and decisive end.
[2] The Court must resist the temptation to perform early surgical excisions upon the pleadings. A scalpel deployed too soon may sever beams that are integral to the case's structural integrity—claims that warrant the oxygen and illumination of a full trial. Litigation, like architecture, requires foundations to be tested under load before they are condemned.
[3] The appellants contend that the Sessions Court erred in striking out their claim, arguing that the respondent's application was procedurally defective, that the Sessions Court had jurisdiction, that leave under s 8(1)(a) of the Insolvency Act 1967 was not required or not fatal and that their claim disclosed a reasonable cause of action.
[4] The respondent, on the other hand, maintains that the Sessions Court's decision was correct, that the appellants' claim was fundamentally flawed and that the striking out was justified.
Background Facts
[5] The appellant, LKT Ventures Sdn Bhd ("LKT"), is a company incorporated under the Companies Act 2016. The 1st Appellant, Ong Wei Shen, is a director of LKT. The respondent, Lim Eng Siang, is a former director of LKT.
[6] The respondent was appointed as a director of LKT on 23 May 2018 and removed on 15 April 2019 pursuant to a resolution passed at an Extraordinary General Meeting ("EGM"). The validity of that EGM was subsequently challenged in the High Court in Originating Summons No WA 24NCC-327-06/2019 ("Suit 327") [Kok Zi Yao & Ors v. LKT Ventures Sdn Bhd & Ors 2019 MarsdenLR 2220; [2020] 2 CLJ 652].
[7] On 20 December 2019, the High Court declared the EGM invalid and ordered that the respondent and other former directors be reinstated. The appellants did not comply with that order.
[8] The appellants later discovered three suspicious transactions involving another former director, Kok Zi Yao ("KZY"), occurring between December 2017 and May 2018. These transactions pre dated the respondent's appointment as director.
[8] The appellants commenced Civil Suit No: WA B-52NCvC-122-03/2025 in the Sessions Court, alleging that the respondent breached fiduciary duties by failing to detect or prevent the suspicious transactions and by failing to comply with the reinstatement order. The respondent applied to strike out the claim.
Procedural History
[10] The respondent filed a Notice of Application dated 30 June 2025 seeking to strike out the appellants' claim under O 18 r 19(1)(a)-(d) and O 92 r 4 of the Rules of Court 2012. The respondent relied on several grounds:
• that the claim disclosed no reasonable cause of action;
• that it was scandalous, frivolous, or vexatious;
• that it was an abuse of process;
• that the appellants failed to obtain leave under s 8(1)(a) of the Insolvency Act 1967;
• that the claim was barred by res judicata; and
• that the Sessions Court lacked jurisdiction.
[11] The Sessions Court allowed the application and struck out the claim with costs of RM3,000.00.
[12] The appellants filed a Notice of Appeal on 8 December 2025.
Issues On Appeal
[13] The appeal raises the following issues:
(1) Whether the respondent's striking-out application was defective for failing to specify the limb of O 18 r 19.
(2) Whether the Sessions Court had jurisdiction over the claim.
(3) Whether the appellants' failure to obtain leave under s 8(1)(a) of the Insolvency Act 1967 rendered the action incompetent.
(4) Whether the appellants' claim disclosed a reasonable cause of action.
(5) Whether the claim was barred by res judicata or issue estoppel.
(6) Whether the Sessions Court correctly exercised its discretion to strike out the claim.
[14] Before turning to the substantive issues, I pause to
