TAI MAY CHEAN (NRIC NO.: 531113-10-5670) 1. UNITED EASTERN RESOURCES SDN BHD (COMPANY NO.: 416181-T) 2. NG PIK LIAN (NRIC NO.: 320718-05-5012)

TAI MAY CHEAN (NRIC NO.: 531113-10-5670) 1. UNITED EASTERN RESOURCES SDN BHD (COMPANY NO.: 416181-T) 2. NG PIK LIAN (NRIC NO.: 320718-05-5012)

The Court of Appeal held the appellant satisfied the subjective element of good faith (honest belief in a good cause of action with reasonable prospects) and the proposed derivative action was prima facie in the best interest of the company because the company paid the redemption sum, transfer documents were prepared but not executed, rentals were retained by the vendor, and imminent limitation and statutory/directorial duties justified allowing the action; pending mental health proceedings, winding up petition, delay and prior criminal charge did not, on the facts, defeat leave. Consequently the High Court's dismissal was set aside and leave granted.

Citation
W-02(NCC)(A)-1955-10/2019 (Mahkamah Rayuan)
Parties
Appellant / Plaintiff: Tai May Chean; First Respondent / Nominal Defendant: United Eastern Resources Sdn Bhd; Second Respondent / Defendant: Ng Pik Lian
Court
NCC
Jurisdiction
Malaysia
Judgment Date
27 April 2021
Case Number
W-02(NCC)(A)-1955-10/2019 (Mahkamah Rayuan)
Procedural Posture
Derivative Action Under Companies Act 2016 (leave to Commence Derivative Suit) / Appeal to Court of Appeal Against High Court Dismissal of Leave Application; Decision on Leave Application
Outcome
Appeal allowed; High Court order dismissing leave application set aside; leave granted to commence derivative action by United Eastern Resources Sdn Bhd against TYY Resources Sdn Bhd
Legal Topics
Derivative Action, Directors' Duties and Liabilities, Leave to Commence Derivative Proceedings, Limitation of Actions (specific Performance), Mental Capacity / Mental Health Act Issues, Winding Up (just and Equitable), Constructive Trust / Transfer of Title
Source Language
Malay/English
Company Law Civil Procedure Equity and Trusts Criminal Law Family Law Derivative Action Directors' Duties and Liabilities Leave to Commence Derivative Proceedings +4 more

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Parties

Tai May Chean

Appellant / Plaintiff

United Eastern Resources Sdn Bhd

First Respondent / Nominal Defendant

Ng Pik Lian

Second Respondent / Defendant

Procedural Posture

Derivative Action Under Companies Act 2016 (leave to Commence Derivative Suit) / Appeal to Court of Appeal Against High Court Dismissal of Leave Application; Decision on Leave Application

Legal Issues

  1. 1 Whether applicant was acting in good faith for purposes of s.348(4) Companies Act 2016
  2. 2 Whether proposed derivative action is prima facie in the best interest of the company
  3. 3 Effect of pending mental health proceedings on leave application

Ratio Decidendi

The Court of Appeal held the appellant satisfied the subjective element of good faith (honest belief in a good cause of action with reasonable prospects) and the proposed derivative action was prima facie in the best interest of the company because the company paid the redemption sum, transfer documents were prepared but not executed, rentals were retained by the vendor, and imminent limitation and statutory/directorial duties justified allowing the action; pending mental health proceedings, winding up petition, delay and prior criminal charge did not, on the facts, defeat leave. Consequently the High Court's dismissal was set aside and leave granted.

Court Disposition

Appeal allowed; High Court order dismissing leave application set aside; leave granted to commence derivative action by United Eastern Resources Sdn Bhd against TYY Resources Sdn Bhd

Orders

  • Set aside High Court order dated 24.10.2019 dismissing leave application
  • Grant leave for plaintiff/appellant to commence derivative action in the name of United Eastern Resources Sdn Bhd against TYY Resources Sdn Bhd under ss 345, 347 and 348 Companies Act 2016