Sessions Court Sets Aside CS Logistics' Ex Parte Injunction Over Non-Disclosure and Lack of Urgency

Sessions Court Sets Aside CS Logistics' Ex Parte Injunction Over Non-Disclosure and Lack of Urgency

The Sessions Court of Malaysia has set aside an ex parte interim injunction obtained by CS Logistics Pte. Ltd. against CL Agriculture Technology Sdn. Bhd. and its directors, ruling that the Singapore-based company failed to make full and frank disclosure of material facts and did not demonstrate genuine urgency to justify proceeding without notice. Justice Mohd Zamir Suhaimee also ordered damages to be assessed for losses caused by the now-vacated order.

The Dispute Over Shares and a Joint Venture

The case stems from a business relationship between CS Logistics and the Second Defendant, who together incorporated a Singapore entity, CL Agriculture Technology (Singapore) Pte. Ltd. (CLSG), in October 2023. CS Logistics claimed that the Second Defendant held 70% of the shares in CL Agriculture Technology Sdn. Bhd. (CLMY) on trust for it as part of the joint venture, and that a subsequent payment of SGD13,274.00 was full consideration for both the Second Defendant's CLSG shares and all CLMY shares. The defendants denied this, asserting that the only agreement was a written share transfer agreement dated 10 June 2024 for CLSG shares valued at SGD51,000.00, and that the payment was merely a partial payment.

On 8 September 2024, CS Logistics obtained an ex parte order from the Sessions Court restraining the defendants from transferring their CLMY shares and requiring them to provide access to company premises. The defendants filed an application to set aside the order, arguing material non-disclosure, lack of urgency, and abuse of process.

Arguments on Both Sides

The defendants contended that CS Logistics had failed to disclose the written CLSG share transfer agreement and their prior notice of demand and notice of action dated 23 August 2024, which explicitly rejected CS Logistics' ownership claims. They also argued that no genuine urgency existed, as the supporting affidavit gave only a general assertion of possible share disposal without any evidence of imminent transfer. Furthermore, they alleged that CS Logistics misused the order by forcibly entering CLMY's premises, cutting locks, and replacing them to exclude the defendants.

CS Logistics maintained that it had complied with disclosure requirements, arguing that the written agreement was an "afterthought" prepared for accounting purposes and that its omission was not material. It claimed that the defendants' solicitors had been asked to "hold their hands" and that notice would have defeated the purpose of the application. On the premises entry, CS Logistics asserted that the order prevented the defendants from obstructing access and that forced entry was necessary when no response was received.

Legal Analysis: A Failure to Disclose and a Lack of Urgency

Justice Mohd Zamir Suhaimee applied the principle from * Kosma Palm Oil Mill Sdn Bhd v Koperasi Serbausaha Makmur Bhd * that an ex parte applicant must act with the utmost good faith and disclose all relevant material, including unfavourable points. The court found that the written agreement dated 10 June 2024 was within CS Logistics' possession and was material because it directly contradicted the plaintiff's claimed basis for beneficial ownership of the CLMY shares. "The omission of the written agreement dated 10.6.2024 amounted to material non-disclosure," the judge held, noting that the document could reasonably have affected the court's discretion.

The court also found that CS Logistics failed to fairly present the defendants' notice of demand, which outlined their competing position. This was a breach of Order 29 rule 1(2A)(d) of the Rules of Court 2012 , which requires a clear statement of the absent party's likely answer.

On urgency, the judge observed that the supporting affidavit contained only a general assertion and did not identify any proposed transfer or other contemporaneous act indicating imminent disposal. "The supporting affidavit did not identify any proposed transfer, prospective purchaser, attempted disposal, corporate filing or other contemporaneous act indicating that either registered shareholder was about to dispose of the CLMY shares." Given that the defendants were represented by solicitors in active communication, the court found that notice was reasonably practicable.

Misuse of the Injunction

A further ground for setting aside the order was the plaintiff's conduct after obtaining it. On 15 September 2024, persons acting for CS Logistics entered the CLMY premises using bolt cutters and replaced the lock. The judge held that the ex parte order restrained the defendants from preventing access but did not authorise forcible entry or self-help enforcement. "The Plaintiff could not enlarge the terms of the injunction through unilateral action," the court stated, adding that "the ex parte order was used for a purpose and in a manner which its terms did not authorise."

Key Observations from the Judgment

• "The omission of the written agreement dated 10.6.2024 amounted to material non-disclosure."
• "The supporting affidavit did not identify any proposed transfer, prospective purchaser, attempted disposal, corporate filing or other contemporaneous act indicating that either registered shareholder was about to dispose of the CLMY shares."
• "The Plaintiff could not enlarge the terms of the injunction through unilateral action."
• "The ex parte order was used for a purpose and in a manner which its terms did not authorise."
• "Not every omission, however, automatically requires the order to be set aside... the Court must consider whether the justice of the case requires the continuance or revocation of the order."

Decision and Orders

Justice Mohd Zamir Suhaimee allowed the defendants' application, setting aside the ex parte injunction dated 8 September 2024. The court ordered that damages sustained by the defendants by reason of the injunction be assessed and paid by CS Logistics, with costs of the assessment also borne by the plaintiff. Additionally, CS Logistics was ordered to pay RM5,000.00 in costs for the application.

The judge emphasised that the ruling does not determine the ultimate ownership of the CLMY shares, which remains for trial. However, the decision underscores the strict duty of candour required in ex parte applications and confirms that an expired injunction does not preclude a court from examining whether it should have been granted in the first place, particularly where damages remain in issue.