High Court grants ex parte interim injunction restraining Kujaya Dormitories' property sale

High Court grants ex parte interim injunction restraining Kujaya Dormitories' property sale

The High Court of Malaya at Melaka has granted an ex parte interim injunction to a minority shareholder, restraining Kujaya Dormitories Sdn Bhd and its directors from implementing special resolutions that approved the disposal of two industrial properties in Johor for a combined consideration of not less than RM101 million.

Judicial Commissioner Raja Segaran A/L S.Krishnan, in a detailed 83-paragraph judgment, found that the shareholder, Queck Han Tiong, who holds 20% of the company's issued shares, had raised a serious question to be tried over whether the resolutions were validly passed given the lack of adequate disclosure to shareholders before and during the extraordinary general meeting (EGM) held on 11 August 2026.

Shareholder's information requests rebuffed

The dispute arose after shareholder Chia Chin Koon requisitioned an EGM to propose two special resolutions for the sale of the properties. The company's board, through the company secretary, issued a notice of meeting that reproduced the resolution text but contained no explanatory statement, valuation, or information about any prospective purchaser.

Queck, who received the notice on 21 July 2026, wrote to the board on 24 July requesting a substantial body of information, including the basis for the minimum prices, financial performance of the properties, tenancy arrangements, any offers received, and the company's post-disposal business plan. The company's reply on 4 August 2026 took the position that the requested information was not required, and that Queck's questions "may be raised and discussed at the EGM."

At the EGM, Queck presented 49 written questions. The minutes record that for 48 of them, the chairman—the second defendant, who was also a director—responded: "Chairman said I am attending as a shareholder not as a director, so that no answer." The only information that emerged came from Chia Chin Koon, who stated that an offer letter had been received before April 2025 and that the minimum prices in the resolutions matched that offer.

The resolutions were passed with 80% of votes in favour, Queck voting against.

Court applies three-stage test for interlocutory relief

Justice Raja Segaran applied the established test from * American Cyanamid Co v Ethicon Ltd * and the Malaysian formulation in Keet Gerald Francis Noel John v Mohd Noor bin Abdullah & Ors . The court examined whether there was a serious question to be tried, whether damages would be an adequate remedy, and where the balance of convenience lay.

On the first issue, the court held that the plaintiff's claim—that directors owe a duty to make full and honest disclosure to shareholders before they vote on a resolution—was arguable, even though the resolutions were proposed by a member rather than the board. The court noted that the company's own notice had added an "Execution Authority" resolution that was not in the original requisition, giving any two directors carte blanche to execute sale agreements without further reference to members.

The court found that the plaintiff had identified material information that was withheld, including the actual market value of the properties, their individual financial performance, the viability of the business after disposal, and the legal risk to the existing tenancy.

"The Court has isolated that core: the basis of the price, the existence and provenance of the offer, the identity and connections of the intended purchaser, the treatment of related-party balances from the proceeds, and the consequences for the Company's business. On that core, a serious question to be tried is made out," the judge said.

Damages inadequate, balance tilts in favour of injunction

The court concluded that damages would not be an adequate remedy for the plaintiff if relief were refused, because a completed sale to a bona fide purchaser for value would be irreversible under section 223(5) of the Companies Act 2016 . The value of a 20% interest in a going concern whose principal assets are income-producing properties was not readily quantifiable, the judge observed.

On the balance of convenience, the court held that the harm from wrongly refusing relief—the irreversible disposal of the company's principal assets—outweighed the harm from granting a short delay in execution of a transaction that the defendants could still pursue after a properly informed meeting.

"The consequence of wrongly refusing relief is the irreversible disposal of the Company's principal assets and the dissipation of the proceeds before the validity of the authorising resolutions can be determined. The consequence of wrongly granting it is a delay, measured at this stage in days rather than months, in the execution of a transaction which the Defendants will remain free to pursue if they succeed at the inter partes hearing or at trial," the judgment stated.

Injunction granted with conditions

The court granted the injunction for a period of 21 days, with an inter partes hearing to be fixed within 14 days. The order restrains the company and its directors from taking any step to implement the special resolutions and from selling, transferring, or charging the properties. The order will lapse if the defendants file a written undertaking not to execute any sale agreement pending the inter partes hearing.

The plaintiff was ordered to file a supplemental affidavit within three days verifying notice given to the defendants and disclosing his interest in Kujaya Management Sdn Bhd, the tenant of the properties.

Key Observations

The court made several notable observations on the duty of disclosure:

"A company which tells a member that his questions will be dealt with at the meeting, and whose sole attending director then declines at the meeting to answer any of them on the footing that he is present in a different capacity, invites the inference that the assurance was not intended to be honoured."

"Whether the Board was entitled to enlarge the requisitioned business in that way, and whether the members were adequately informed of the significance of what was added, are themselves serious questions."

"The vice complained of is not the outcome but the manner of reaching it, and a member is entitled to have the Company's most significant decision taken by members who know what it is."

The case has been fixed for inter partes hearing within 14 days, and the defendants are at liberty to apply to vary or set aside the order on short notice.