JUDGMENTBY: MAHADEV SHANKAR JCA (DELIVERING THE JUDGMENT OF THE COURT)

MAHADEV SHANKAR JCA (DELIVERING THE JUDGMENT OF THE COURT) In the court below, Leong Hup Holdings Bhd filed a petition for relief under s 181 of the Companies Act 1965 (the Act) against the first nine respondents (the respondents) named in the petition. The subject matter of the petition was Leong Hups alleged entitlement to representation on the board of directors of KFC Holdings (Malaysia) Bhd (KFCM), and to a right thereby to participate in the management of the affairs of this company. The respondents applied to have the petition struck out on the ground that it did not disclose a reasonable cause of action. The trial judge, Richard Talalla J, dismissed the application. Six separate appeals have come before us. These are by:

(i) the first respondent in the suit below;

(ii) the second, third and fifth respondents;

(iii) the fourth respondent;

(iv) the sixth respondent;

(v) the seventh respondent;

(vi) the eighth respondent (whose name is actually Kentucky Fried

Chicken International Holdings Inc) referred to as KFC

International and the ninth respondent.

Since there were common questions of law and fact in all six appeals, we heard them together. Even though the respondents are in fact the appellants before us, for ease of cross-reference to the judgment of the trial judge, I have continued to refer to them as respondents in this judgment in the same order as they were listed in the court below. The petitioner is referred to throughout as Leong Hup.

Kenanga Nominees (Tempatan) Sdn Bhd and TA Nominees Sdn Bhd (the sixth and seventh respondents) requisitioned an extraordinary general meeting (the EGM) to remove the three brothers (the Lau brothers) on the KFCM board who were to represent the interests of Leong Hup. It was eventually fixed to be held on 18 February 1995. To thwart that move, Leong Hup filed this petition on 14 February 1995, and obtained an interlocutory injunction from Richard Talalla J the next day. (In anticipation of this, Grand Care Sdn Bhd (a shareholder of KFCM) filed a Petition No D5-26-5-95, and inter alia got an order from Abdul Malek Ahmad J on 17 February 1995 that the chairman of the EGM be empowered to adjourn the EGM until the interlocutory order had been discharged (see [1995] 3 AMR at p 2477). This was a collateral proceeding and no further reference will be made to it).

Initially, the respondents proceeded under all the limbs of O 18 r 19(1) of the Rules of the High Court 1980. However, in the course of the proceedings, the respondents elected to proceed under O 18 r 19(1)(a) alone.

In essence, Leong Hups contention was that, by virtue of certain representations made by the first three respondents and certain alleged agreements between it and KFCM; and between the Lau brothers and the first three respondents, Leong Hup had a legitimate expectation to remain on the KFCM Board without any interference from any of the respondents. In essence, the respondents were contending that because KFCM was a public company whose shares were listed on the Kuala Lumpur Stock Exchange (KLSE), the alleged agreements and representations were irrelevant because a group of shareholders, whether acting for themselves or purportedly on behalf of the company, could not contract out of s 128 of the Act which conferred a statutory right to all its shareholders to remove directors at a general meeting. The respondents also contended that the facts pleaded could not provide the basis for any legitimate expectation as alleged or at all.

In his judgment, Richard Talalla J gave a very detailed account of the factual history and some of the cases cited to him. When it came to the crunch, he said:

I did consider the case-law cited on behalf of the respondents

especially the cases relied on most, namely, Re Blue Arrow plc

[1987] BCLC 585 and Re Ringtower Holdings plc (19