Lee Yee Wuen 1. Lee Kai Wuen 2. Low Nang Hiang 3. Kien Yiap Trading Sdn Bhd

Lee Yee Wuen 1. Lee Kai Wuen 2. Low Nang Hiang 3. Kien Yiap Trading Sdn Bhd

The Court allowed the appeal, set aside the High Court order striking out prayers A and B and reinstated those prayers; it held that where oppression under s.346 CA 2016 is predicated on misappropriation of company monies, the court has jurisdiction and wide discretion to order restitution to the company as part of oppression relief. The reflective loss principle does not bar restitutionary relief in an oppression action where the diminution in the complainant's share value is attributable to the oppressive conduct, provided safeguards (eg undertakings to prevent double recovery and protection of creditors) are available.

Citation
J-02(IM)(NCC)-1681-09/2019 (Mahkamah Rayuan)
Parties
Appellant / Plaintiff: Lee Yee Wuen; 1st Respondent / Defendant: Lee Kai Wuen; 2nd Respondent / Defendant: Low Nang Hiang; 3rd Respondent / Defendant (company): Kien Yiap Trading Sdn Bhd
Court
IM
Jurisdiction
Malaysia
Judgment Date
15 June 2020
Case Number
J-02(IM)(NCC)-1681-09/2019 (Mahkamah Rayuan)
Procedural Posture
Civil Appeal Concerning Oppression Under the Companies Act 2016 / Court of Appeal Judgment on Appeal From Johor Bahru High Court (appeal Allowed)
Outcome
Appeal allowed; High Court order dated 19 August 2019 set aside; impugned prayers reinstated
Legal Topics
Oppression (s.346 CA 2016), Derivative Action (ss.347 350 CA 2016), Reflective Loss, Restitution of Misappropriated Funds, Misappropriation / Fiduciary Breach
Source Language
Malay/English
Company Law Civil Procedure Equity and Trusts Oppression (s.346 CA 2016) Derivative Action (ss.347 350 CA 2016) Reflective Loss Restitution of Misappropriated Funds Misappropriation / Fiduciary Breach

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Parties

Lee Yee Wuen

Appellant / Plaintiff

Lee Kai Wuen

1st Respondent / Defendant

Low Nang Hiang

2nd Respondent / Defendant

Kien Yiap Trading Sdn Bhd

3rd Respondent / Defendant (company)

Procedural Posture

Civil Appeal Concerning Oppression Under the Companies Act 2016 / Court of Appeal Judgment on Appeal From Johor Bahru High Court (appeal Allowed)

Legal Issues

  1. 1 Whether a shareholder bringing an oppression action under s.346 CA 2016 may obtain restitutionary relief ordering wrongdoers to repay monies misappropriated from the company
  2. 2 Whether restitutionary relief of that nature must be pursued solely by a derivative action requiring leave under ss.347-350 CA 2016 and is barred by the reflective loss principle

Ratio Decidendi

The Court allowed the appeal, set aside the High Court order striking out prayers A and B and reinstated those prayers; it held that where oppression under s.346 CA 2016 is predicated on misappropriation of company monies, the court has jurisdiction and wide discretion to order restitution to the company as part of oppression relief. The reflective loss principle does not bar restitutionary relief in an oppression action where the diminution in the complainant's share value is attributable to the oppressive conduct, provided safeguards (eg undertakings to prevent double recovery and protection of creditors) are available.

Court Disposition

Appeal allowed; High Court order dated 19 August 2019 set aside; impugned prayers reinstated

Orders

  • High Court order dated 19 August 2019 set aside
  • Prayers A and B of Originating Summons No. JA-24NCC-6-02/2019 reinstated