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FEDERAL COURT PUTRAJAYA
LEE TAK SUAN & ANOR – Appellant
Versus
TUNKU DATO SERI SHAHABUDIN & ORS – Respondent
[Civil Appeal No: 02(I)-15-2008(W)]
[1] The Selangor Turf Club ("the Club") is a registered society registered under s 7 of the Societies Act 1966 ("the Act"), but is not a body corporate. It has a set of rules, called Constitution and Rules ("the Rules"), which operates as a contract between the Club and its members and between the members inter se. The Club is managed by a committee of members. Rule 24(a) of the Rules provides as follows:
All the funds and all the property of the Club shall be vested in the Committee for the time being as Trustees for the Ordinary Members of the Club and the Committee shall have control of such funds and property and they shall also have the entire management of the Club and Club property...
Although the expenditure of the funds of the Club is in the hands of the committee, they are subject to the control of R 24(b) where a proposed expenditure exceeds RM500,000. They have first to comply with certain requirements that are contained in that rule.
[2] The plaintiffs (the appellants here) are ordinary members of the Club. Contending, inter alia, that the committee had spent RM30 million of the Club's funds to purchase worthless shares in a troubled company without a track record, they brought an action by way of originating summons against seven committee members as defendants to, inter alia, obtain compensation and damages for the benefit of the Club. Six of the seven defendants are the respondents here. The plaintiffs also cited as a defendant another member of the Club who was registered by the Registrar of Societies as the public officer of the Club in whose name, according to s 9(c) of the Act, the Club "may sue or be sued". That amounted to citing the Club as a defendant. The plaintiffs professed to sue by way of a derivative action on behalf of all the members of the Club except the seven committee members. The plaintiffs' case was that the committee's wrongdoing was against the Club. According to the rule in Foss v. Harbottle [1843] 2 Hare 461, which originated in the sphere of company law, it was the Club itself that had the right to sue. But to justify their resort to a derivative action as an exception to that rule, the plaintiffs said in their affidavit in support of their action that since the wrongdoers themselves were in control of the bringing of actions by the Club, they would not allow proceedings to be brought by the Club against themselves.
[3] Six of the seven defendant committee members applied for the striking out of the plaintiff's originating summons on the grounds that it was not a derivative action because the Club, being an unincorporated association, was not a legal entity. The High Court dismissed the application with costs. On the question whether the Club was a legal entity, the learned judge held that that was not the issue and that the issue was whether the Club could sue or be sued, which question the learned judge answered in the affirmative, by reason of s 9(c) of the Act, which I have referred to. The six defendants appealed to the Court of Appeal. The Court of Appeal construed what appeared to them to be the reliance by the plaintiffs on the Raintree Club case (Tengku Abdullah Sultan Abu Bakar v. Mohd Latiff Shah Mohd, [1996] 2 MLJ 265 CA) as an affirmation that their action was a representative action such as is provided for by O 15 r 12 of the Rules of the High 1980, and not a derivative action, and, being of the view "that representative action is an answer to the instant appeal", declined to strike out the action but ordered a substitution the effect of which, to my understanding, was to let the plaintiffs' originating summons remain, but to be treated as a representative action and not a derivative action. The Court of Appeal ordered the parties to bear their own costs there and below. The plaintiffs' present appeal is against the entire decision of the Court of Appeal. Before us the six defendants concede that the Court of Appeal had misconstrued the pla
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