Impresive Circuit Sdn Bhd Setia Haruman Sdn Bhd & 11 Lagi

IN THE HIGH COURT OF MALAYA AT KUALA LUMPUR (COMMERCIAL DIVISION) ORIGINATING SUMMONS NO.: WA-24NCC-290-07/2017 In the matter of Setia Haruman Sdn. Bhd. (Company No. 425145-U) And In the matter of Section 346 of the Companies Act, 2016 And In the matter of Order 7 and Order 88 of the Rules of Court, 2012 BETWEEN IMPRESIVE CIRCUIT SDN. BHD. (Company No. 404147-K) …PLAINTIFF AND 1. SETIA HARUMAN SDN. BHD. (Company No. 425145-U) 2. TAN SRI DATUK HAJI MUSTAPHA KAMAL BIN HAJI ABU BAKAR (NRIC No. 490318-08-5599) 3. AHMAD KHALIF BIN TAN SRI DATUK HAJI MUSTAPA KAMAL (NRIC No. 791126-14-6173) 4. DATO’ HAJAH FAZWINNA BINTI TAN SRI DATUK HAJI MUSTAPA KAMAL (NRIC No. 760913-14-5178) 5. FARAH MAHAMI BINTI TAN SRI DATUK HAJI MUSTAPA KAMAL (NRIC No. 820512-14-5662) 2 6. LAO CHOK KEANG (NRIC No. 561117-07-5293) 7. AZHAR BIN OTHMAN (NRIC No. 671008-10-5753) 8. ANWAR SYAHRIN BIN ABDUL AJIB (NRIC No. 730502-10-5027) 9. UEM LAND BERHAD (formerly known as Renong Berhad) (Company No. 90894-P) 10. MENARA EMBUN SDN. BHD. (Company No. 428618-M) 11. MODERN EDEN SDN. BHD. (Company No. 623037-H) 12. VIRTUAL PATH SDN. BHD. (Company No. 408496-M) …DEFENDANTS GROUNDS OF JUDGMENT Introduction [1] Enclosure 1 is an Originating Summons (“OS”) filed by 2 Plaintiffs, Datuk Kasi a/l Palaniappan (“DK”) as 1st Plaintiff and Impresive Circuit Sdn Bhd (“Impresive Circuit”) as 2nd Plaintiff, under Section 346 of the Companies Act, 2016 (“CA 2016”) alleging minority oppression in respect of the affairs of Setia Haruman Sdn Bhd (“Setia Haruman” and interchangeably “the Company”). [2] Pursuant to the 2nd to the 9th Defendants’ application, DK was struck out as a Plaintiff for lack of locus standi on 25.4.2018 as he was not a shareholder of the Company. The 10th to 12th Defendants were added as parties to the OS on the same day. 3 [3] I had dismissed the OS on 26th June 2021. The Plaintiff has filed an appeal against my decision. These are the grounds for my decision. Background and Parties [4] The Company was incorporated on 28.3.1997 as a joint venture company to carry out the business of developing a new township, CyberJaya comprising of 4 shareholders invited by the Government of Malaysia to establish the Company holding shares as follows: (i) UEM LAND BERHAD (“UEM” then known as Renong Berhad) - 25% (ii) Landmarks Berhad - 25% (iii) Country Heights Holdings Berhad - 25% (iv) Tan Sri Mustapha Kamal (“D2” and interchangeably “TSMK”) - 25% [5] A shareholders’ agreement was entered into between the 4 shareholders on 7.5.1997 (“Shareholders’ Agreement”). [6] In 2004, Landmarks and Country Heights sold their shares in the Company to Virtual Path, Modern Eden, and Impresive Circuit after which the shareholders of the Company holding shares are as follows: (i) Menara Embun(“10th Defendant ”) - 25% (ii) UEM (“9th Defendant”) - 25% (iii) Virtual Path(“12th Defendant”) - 25% (iv) Modern Eden(“11th Defendant”) - 12.5% (v) Impresive Circuit - 12.5% (interchangeably “the Plaintiff”) 4 [7] As at the date of the OS, Modern Eden and Impressive Circuit each held 750,000 ordinary shares in the Company whilst the rest of the other 3 shareholders each held 1,500,000 ordinary shares. [8] DK and TSMK, the 2nd Defendant are both not members/shareholders of the Company. DK however holds shares in 3 corporate members of the Company as follows: (i) Menara Embun - 40% (ii) Modern Eden - 35% (iii) Impresive Circuit - 50% [9] The 3 r d to the 8 t h Defendants were/are directors of the Company, but are not members, of the Company. The Plaintiff’s claim [10] DK and Impresive Circuit filed the OS against the Defendants claiming minority oppression and conspiracy and sought the following reliefs against the 2nd to 12th Defendants: (a) a declaration that the 2nd to 12th Defendants respectively had managed and conducted the affairs of Company oppressively and/or exercised their powers oppressively and/or disregarded and/or acted in a manner unfairly prejudicial to the interests of the Plaintiffs as members of the Company; (b) an order that the 2nd to 12th Defendants do jointly and/or severally purchase Impressive Circuit’s 750,000 ordinary 5 shares of the Company at such price and on such terms as shall be determined by the Court. [11] DK alleged that: (i) the joint participation in the Company was premised on a longstanding relationship of mutual trust and confidence between DK and TSMK arising from numerous previous joint business ventures and there was an understanding (“the Understanding”) that: (a) both TSMK and DK would jointly manage their joint business ventures; (b) whilst TSMK was always the Executive Chairman, DK was always the Chairman of the Executive Committee, DK would spearhead business strategy and all financial and corporate matters; and (c) both TSMK and DK would share the profits and both TSMK and DK or their nominees would be shareholders of their joint business ventures. (ii) Menara Embun was the vehicle used for TSMK and DK’s joint participation in the Company; (iii) Pursuant to the Shareholders’ Agreement, each of four equal shareholders of the Company is entitled to appoint two directors; 6 (iv) Following the sale of Landmarks’ and Country Heights’ 50% shares in the Company, DK and TSMK’s joint vehicle, Modern Eden acquired 12.5%, TSMK’s personal vehicle, Virtual Path acquired 25%, whilst DK’s vehicle, Impresive Circuit acquired 12.5%; (v) Consonant with their customary split, the purchase of 50% stake in the Company was funded by TSMK and DK on a 65:35 ratio; (vi) As a result, both TSMK and DK had joint control of 75% stake in the Company as follows: (a) TSMK effectively holding 48.75%; (b) DK effectively holding 26.25%; and (c) UEM holding the balance 25% equity. (vii) In tandem with the Understanding, TSMK was appointed Chairman of the Company and DK was appointed Chairman of the Company’s Executive Committee; (viii) Consistent with the previous Shareholders’ Agreement by which each 25% shareholder was entitled to appoint 2 members of the board, a new understanding evolved and came into being in that TSMK with near 50% stake was entitled to appoint 4 directors whilst DK and UEM with 25% stake each was entitled to appoint 2 directors each; in essence, a 4:2:2 board arrangement (“the New Board Understanding”); 7 (ix) Pursuant to the New Board Understanding, DK and Balasingam, a nominee of DK via nomination by Impresive Circuit, were always re-elected as directors of the Company until the acts of oppression alleged in the OS; (x) Impresive Circuit had a legitimate expectation to board representation in the Company pursuant to the Understanding and New Board Understanding; (xi) There was a breach of the Understanding, New Board Understanding and legitimate expectation when: (a) TSMK and nominees refused to appoint DK’s nominee Lee Weng Yip to the Board to replace Balasingam who had resigned notwithstanding UEM has signed the circular resolution for the appointment of Mr. Lee Wing Yip; (b) TSMK’s nominees voted against DK’s re-election as a director of the Company at the AGM of 30.6.2016 with UEM’s nominees having abstained from voting; (c) UEM’s act in abstaining from voting to re-elect DK was pursuant to a conspiracy between UEM and TSMK and TSMK’s nominees to effectively remove DK as UEM had always voted in favour of DK’s re- election; 8 (d) Prior to DK’s non re-election, he was excluded from participation in the management of the Company; (e) Dividends for year 2016 were not declared and paid despite agreement to do so. [12] In short, it is Impresive Circuit’s case that the non-appointment of Balasingam’s replacement, non re-election of DK and exclusion from management of the Company in breach of the Understanding, New Board Understanding and Impresive Circuit’s legitimate expectation to participate in the Company, were all oppressive towards, in disregard of, and unfairly prejudiced Impresive Circuit as a member of the Company. [13] Effectively, Impresive Circuit was no longer represented in the Company’s Board despite holding 12.5% of the entire shares in the Company and indirectly 26.25%, and despite all other shareholders having Board representation. [14] By not having any representation on the Board, Impresive Circuit therefore had no say in how the Company was to be run despite having a substantial shareholding. Hence, its investment in the Company was rendered pointless. As such, there was commercial unfairness and a visible departure from the standards of fair play in the Company. Defendants’ contentions to the allegations of oppression [15] The Defendants asserted that the allegations of breach of Understanding, New Board Understanding, legitimate expectation and conspiracy are DK’s complaints and personal to him. As DK has been 9 struck off as a Plaintiff, DK’s complaints are not maintainable by the Impresive Circuit; in other words, there is no complaint by the Impresive Circuit qua shareholder in relation to the affairs of the Company as is required by section 346 of the Companies Act 2016. [16] The Defendants also contended that the claim of oppression arising from the non-payment of Dividend for the Year 2016 has no merit, Impresive Circuit was not treated unfairl y or differently from other shareholders as all shareholders were not paid dividends due to the Company’s severe cash flow; in addition, prior consent of Bank Pembangunan Malaysia Berhad for any proposed payments of dividends has to be obtained as a term of the Loan Agreement for RM750,000,000.00 taken by the Company and if dividends were paid, the Company would not be able to meet the Debt Service Cover Ratio and the Loan Life Cover Ratio stipulated in the Loan Agreement. Non-payment of dividends is also a management decision. [17] The Company, 10th to 12th Defendants additionally contended that: (i) the alleged Understanding and New Board Understanding was between DK and TSMK. Impresive Circuit, 9th, 10th, 11th and 12th Defendants were not parties to it; (ii) Teh Hong Poh, the deponent of affidavits filed on behalf of the 10th, 11th and 12th Defendants, was not cross-examined on the Understanding and/or New Board Understanding; 10 (iii) DK was not re-elected to the Board of the Company in its best interest as a result of DK, Felina and TSMK being blacklisted by the Ministry of Housing, owing to the blacklisting, the progress and license of the development known as Ceria Residence was at risk (“the blacklisting problem”). [18] The 2nd to 6th Defendants besides the matters set out in paragraph 16 and 17 of this judgment further contended: (i) the blacklisting problem; (ii) there were pending bankruptcy proceedings against DK by W estpac Banking Corporation in Australia since 2015 in respect of a Judgment for AUD$16million. Any bankruptcy order against DK would inevitably prejudiciall y affect the Company; (iii) there cannot be a buy-out order against TSMK and the 3rd to 6th Defendants as they are not shareholders of the Company; (iv) even if the Shareholders’ Agreement is valid (which is denied), Impresive Circuit’s claim that it is entitled to nominate a director in the 1 s t Defendant under the terms and conditions of the Shareholders Agreement is misconceived in that: (a) Impresive Circuit is not a party to the Shareholders Agreement; 11 (b) Clause 7.2 of the Shareholders Agreement expressly provides that a party with 12.5% or less shareholding is not entitled to nominate a person to be appointed a director; (c) Clause 16.5 of the Shareholders ’ Agreement expressly provides that the Agreement does not constitute a partnership between the parties. This expressly excludes the application of the Ebrahimi v Westbourne Galleries Ltd and others principle; (v) that there was no such Understanding and/or New Board Understanding; none of the other shareholders and/or Defendants were aware of such an Understanding/New Board Understanding; it was not even put to Teh Hong Poh that there was an Understanding/New Boa rd Understanding or conspiracy; (vi) if there was the Understanding and/or New Board Understanding, it reasonably ought to have been in writing particularly when TSMK resigned from the Board in 2015; and DK is experienced, a professional architect and by his own account, savv y in commercial and financial matters; (vii) the principle of legitimate expectation has no application on the facts of this case; the Company 12 is not a quasi-partnership as such there is no basis to invoke the just and equitable principles under Ebrahimi; all references to legitimate expectation are DK ’s and not the Plaintiff; (viii) TSMK’s firm contention that in all companies that he incorporated, and there were at least 50, he always held the majority shares so as to be firmly in control of the affairs of the company; (ix) The elements of conspirac y is not proven. [19] The 7 t h to 9 t h besides the matters set out in paragraph 16 and 17 of this judgment further contended: (i) there was no pre-existing partnership prior incorporation of the Company; the Company is not a quasi - partnership as such there is no basis to invoke the just and equitable principles under Ebrahimi to sustain a claim for oppression based on purported understandings between shareholders; (ii) UEM and its Nominees were not in any way privy to the Understanding between TSMK and DK; (iii) there is no New Board Understanding; there is no evidence of the purported New Board Understanding which the Plaintiff contends arose from the Shareholders’ Agreement which purportedly granted each shareholder holding 25% of the Company’s shares to nominate two directors. The Shareholders’ Agreement is only binding on the four original 13 parties to the agreement, i.e., UEM, Landmarks, Country Heights and TSMK. DK and/or the Plaintiff were not party to the Shareholders’ Agreement which in any event, had lapsed following the sale of Country Heights’ and Landmarks’ shares. No new written or oral agreement was entered into by the new shareholders to evince the alleged New Board Understanding; (iv) UEM abstained from voting to re-elect DK because they were aware of differences between DK and the other shareholders of the Company, and did not want to get involved; (v) the elements of conspirac y were not proven; t here is no reason for TSMK and his nominees to conspire with UEM on the re-election of DK as the majority shareholders are clearly in a position to successfully vote against the re- election, without UEM’s involvement; (vi) there is a complete lack of motive or commercial justification for UEM to take any steps to ensure that DK is not re-elected as a director; (vii) even if such a New Board Understanding existed (which is denied), UEM had not breached the alleged understanding; (viii) the Plaintiff failed to put its case to UEM and its Nominees’ deponent Encik Azmy bin Mahbot, during cross- examination and is deemed to have abandoned its case - Aik Ming (M) Sdn Bhd & Ors v Chang Ching Chuen [1995] 2 MLJ 770 (CA). 14 The Law [20] Section 181 of the Companies Act 1965 (“CA 1965”) is the predecessor of s. 346 of CA 2016. This will become relevant when considering the cases decided under s 181 of CA 1965 such as Re Kong Thai Sawmill (Miri) Sdn Bhd; Kong Thai Sawmill (Miri) Sdn Bhd & Ors. v Ling Beng Sung [1978] 2 MLJ 227; Pan-Pacific Construction Holdings Sdn Bhd v Ngiu-Kee Corp (M) Bhd & Anor [2010] MLJU 269; [2010] 6 CLJ 721. [21] S. 346 CA 2016 is produced for ease of reference and for its scope. It provides: “S. 346. Remedy in cases of an oppression. (1) Any member or debenture holder of a company may apply to the Court for an order under this section on the ground - (a) that the affairs of the company are being conducted or the powers of the directors are being exercised in a manner oppressive to one or more of the members or debenture holders including himself or in disregard of his or their interests as members, shareholders or debenture holders of the company; or (b) that some act of the company has been done or is threatened or that some resolution of the members, debenture holders or any class of them has been passed or is proposed which unfairly discriminates against or is otherwise prejudicial to one or more of the members or debenture holders, including himself. (2) If on such application the Court is of the opinion that either of those grounds is established, the Court may make such order as the Court thinks 15 fit with the view to bringing to an end or remedying the matters complained of, and without prejudice to the generality of subsection (1), the order may— (a) direct or prohibit any act or cancel or vary any transaction or resolution; (b) regulate the conduct of the affairs of the company in the future; (c) provide for the purchase of the shares or debentures of the company by other members or debenture holders of the company or by the company itself; (d) in the case of a purchase of shares by the company, provide for a reduction accordingly of capital of the company; or (e) provide that the company be wound up. (3)... (4)... (5) …. (6)……. ” [22] Re Kong Thai Sawmill (supra) is the leading authority on s. 181 where the Privy Council explained the approach to be taken (at page 229): “……….for the case to be brought within s 181(1)(a) at all, the complaint must identify and prove 'oppression' or 'disregard'. The mere fact that one or more, of those managing the company possess a majority of the voting power and, in reliance upon that power, make policy or executive decisions, with which the complainant does not agree, is not enough. Those who take interests in companies limited by shares have to accept majority rule. It is only when majority rule passes over into rule oppressive of the minority, or in disregard of their interests, that the section can be invoked, As was said in a decision upon the United Kingdom section there must be a visible departure from the standards of fair dealing and a violation of the conditions of fair play which a shareholder is entitled to expect before a case of oppression can be made (Elder v Elder & Watson Ltd): Their Lordships would place the 16 emphasis on 'visible'. And similarly 'disregard' involves something more than a failure to take account of the minority's interest: there must be awareness of that interest and an evident decision to override it or brush it aside or to set at naught the proper company procedure (per Lord Clyde in Thompson v Drysdale). Neither 'oppression' nor 'disregard' need be shown by use of the majority's voting power to vote down the minority: either may be demonstrated by a course of conduct which in some identifiable respect, or at an identifiable point in time, can be held to have crossed the line. …….. in a number of United Kingdom decisions it has been held that for s 210 to apply the complainant must show oppression continuing up to the date of proceedings (eg, In Re Jermyn Street Turkish Baths Ltd); where there has been oppression in the past the section does not bite. Their Lordships agree that the wording of the section (and the same is true of s 181(1)(a)) relates to a present state of affairs: 'are being conducted', powers 'are being exercised' are grammatically clear: the language may be contrasted with that of s 181(1)(b) which refers to an act of the company which has been done or threatened. But this argument must not be taken too far. What is attacked by sub-s (1)(a)) is not particular acts but the manner in which the affairs of the company are being conducted or the powers of the directors exercised. And these may be held to be 'oppressive' or 'in disregard' even though a particular objectionable act may have been remedied. A last minute correction by the majority may well leave open a finding that as shown by its conduct over a period, a firm tendency or propensity still exists at the time of the proceedings to oppress the minority or to disregard its interests so calling for a remedy under the section. This point is well brought out in Re Bright Pine Mills Pty Ltd.”(emphasis added) [23] Clear guidance can also be found in the Federal Court decision of Pan-Pacific Construction Holdings Sdn Bhd v Ngiu-Kee Corp (M) Bhd & Anor [2010] 6 CLJ 72; [2010] MLJU 269 which set out some important principles in order to succeed in an oppression petition pursuant to then s. 181 CA 1965. I produce them in extenso: 17 “[22] But in order to better appreciate the core issue it may be appropriate to first examine the principles of law on the application of section 181 in relation to a company which is not in the nature of quasi-partnership. Meanwhile, it is trite law that in order to succeed in its petition the burden is upon a petitioner on the balance of probability to establish all the elements required to be proven under section 181. [23] This Court in Owen Sim Liang Khui v Piasau Jaya Sdn Bhd & Anor [1996] 1 MLJ 113 briefly reviewed the genesis of judicial intervention in the internal affairs of incorporated companies. It said that 'Traditionally, courts have been reluctant to interfere with matters relating to the internal management of incorporated companies… Two landmark decisions settled the law upon the subject for all time. The first of these was Foss v Harbottle (1843) 67 ER 190; the second was Mozley v Alston (1847) 41 ER 833 … In time it was accepted that what has come to be known as the rule in Foss v Harbottle.' [24] The judgment went on to say that the effect of such legislative provisions as section 210 of English Companies Act 1948 (later section 459 of the UK Companies Act 1985 and presently section 994 UK Companies Act 2006) which is similar but not in pari materia with section 181 of the Act which is wider in scope, 'was not to abrogate but to introduce limited exceptions to the rule in Foss v Harbottle'. Thus, it is fair to say that oppression for instance in company law is not a free-floating common law concept but a legislative creature. [25] Therefore, in order to succeed in its Petition pursuant to section 181 the Petitioner has to establish and 'must eminently be determined according to the facts' of this case that the affairs of the Company are being conducted or that the powers of the directors are being exercised in an oppressive manner or in disregard of its interests, or to its prejudice some unfairly discriminatory or prejudicial act of the Company has been done or threatened, or that some resolutions of the members, debenture holders or any class of them has been passed or is proposed to be passed. 18 [26] In other words section 181 permits judicial remedy on four categories of conduct, namely, oppressive conduct, conduct in disregard of interests, unfairly discriminatory conduct or prejudicial conduct. [27] It may also be noted that from the wordings of section 181 its basic theme is 'unfairness'. However, unfairness 'does not mean that the court can do whatever the individual judge happens to think fair. The concept of fairness must be applied judicially and the content which it is given by the courts must be based upon rational principles. "The court....has a very wide discretion, but it does no sit under a palm tree"'. (See: O'Neil v Philips [1999] 2 All E R 961). [28] In Re Saul D Harrison & Sons plc [1995] 1 BCLC it was explained (Hoffmann LJ [as he then was]) that in 'deciding what is fair or unfair for the purposes of s. 459, it is important to have in mind that fairness is being used in the context of a commercial relationship. The articles of association are just what their name implies: the contractual terms which govern the relationships of the shareholders with the company and each other. They determine the powers of the board and the company in general meeting and everyone who becomes a member of a company is taken to have agreed to them. Since keeping promises and honouring agreements is probably the most important element of commercial fairness, the starting point in any case under s. 459 will be to ask whether the conduct of which the shareholder complains was in accordance with the articles of association…The answer to this question often turns on the fact that the powers which the shareholders have entrusted to the board are fiduciary powers, which must be exercised for the benefit of the company as a whole… But the fact that the board are protected by the principle of majority rule does not necessarily prevent their conduct from being unfair within the meaning of s. 459'. [29] Thus, in Re Kong Thai Sawmill (Miri) Sdn Bhd [1978] 2 MLJ 227 the term 'disregard of interests' is to be understood to mean 'unfair disregard' while 'oppression' denotes an 'unfairly prejudicial conduct' which means a conduct 'departing from standards of fair dealing and a violation of conditions of fair play'. But 'a member of a company will not ordinarily be entitled to complain of 19 unfairness unless there has been some breach of the terms on which he agreed that the affairs of the company should be conducted'. And 'trivial or technical infringements of the articles were not intended to give rise to petitions under s. 459'. (See: Re Saul D Harrison & Sons Plc (supra). [30] The principles of law are therefore quite settled in a non-quasi-partnership company. However, where it is (in the nature of quasi-partnership) as in this case there is an added factor which members are obliged in law to observe, namely, to act in good faith to one another.” [24] The meaning of ‘oppression’ is beyond universal definition - Kumagai Gumi Co Ltd v Zenecon-Kumagai Sdn Bhd & Ors and another application [1994] 2 MLJ 789 at pp 804–806, citing Re Tivoli Freeholds Ltd [1972] VR 445; Jaya Medical Consultants Sdn Bhd v Island & Peninsular Bhd & Ors [1994] 1 MLJ 520 at p 398. [25] That a shareholder has a legitimate right to participate in the management of the company based on an understanding had been upheld in cases such as Tan Kian Hua v Colour Image Sdn Bhd & Ors [2004] 6 CLJ 174; [2004] MLJU 178; Wong Kim Yoon v Cheong Kim Hong & Ors [2019] MLJU 1589 and Tob Chee Hoong v Tob Chee Choong & Ors [2017] MLJU 1303; [2017] I LNS 1256. [26] Whether the affairs of the company are being conducted in a manner oppressive to some part of the members including the Plaintiff, is a question of fact for the Court to decide to be answered not by a consideration of events in isolation, but “to events considered as part of a consecutive story” - Kumagai Gumi Co Ltd v Zenecon-Kumagai Sdn Bhd & Ors [1994] 2 MLJ 789; Genisys Intergrated Engineers Pte Ltd v UEM Genisys Sdn Bhd & Ors [2008] 6 MLJ 237 CA . 20 [27] Before this Court considers the issues in the Amended OS, I should mention that the Plaintiff applied unsuccessfully to convert the OS into a writ action. The Plaintiff’s appeal against that decision to the Court of Appeal and subsequent application for leave to appeal to the Federal Court were both dismissed. [28] The Plaintiff obtained an Ord er dated 03.12.2019 to cross examine TSMK, Azmy bin Mahbot (UEM’s Director) and Teh Hong Poh on the alleged Understanding/New Board Understanding and conspirac y. [29] Due to the restrictions occasioned by the Covid -19 pandemic, in tandem with adapting to the ‘new norm’, the parties agreed that cross-examination and re-examination of the above deponents from 17.3.2021 to 19.3.2021 be conducted virtually online by using the Zoom video conferencing platform. [30] Here, considering the entire story as a whole from the evidence adduced during cross –examination, re-examination and the affidavits before the court, the question is, was it made out that the affairs of the Company were conducted in a manner oppressive to the Plaintiff? [31] This is a convenient point for this Court to consider the issues in the Amended OS, namely: (i) Whether there was a breach of Understanding, New Board Understanding and legitimate expectation when: 21 (a) TSMK, UEM and their nominees failed or refused to appoint DK’s nominee to the Board to replace Balasingam who had resigned; (b) TSMK, UEM and their nominees excluded DK from participation in the management of the Company; (c) TSMK, UEM and their nominees refused to re-elect DK as a director of the Company; (ii) Whether the non re-election of DK at the AGM of the Company on 30.6.2016 was pursuant to a conspiracy between TSMK, TSMK’s nominees, UEM and its nominee; (iii) Whether the failure to declare Dividends for year 2016 despite any agreement or promise to do so was oppressive to the Plaintiff. Breach of Understanding, New Board Understanding and legitimate expectation [32] Central to any alleged breach of Understanding, New Board Understanding and legitimate expectation as aforesaid, is the question whether in fact there was any Understanding, New Board Understanding and legitimate expectation. [33] The existence of the Understanding, the New Board Understanding, and the alleged breaches thereof were denied by all the Defendants. The parties to these Understandings are said to be only DK and TSMK and the other Defendants are not privy to these Understandings. 22 [34] In the matter before this Court, there is no dispute that: (i) the Understanding and the New Board Understanding were not documented; (ii) the alleged oppressive acts averred in the Affidavit in Support of the Plaintiff relate exclusively to the alleged grievances of DK in his personal capacity and not that of the Plaintiff ; and (iii) DK is not a shareholder of the Company. He is only a 50% shareholder of the Plaintiff. Neither is TSMK a shareholder of the Company. [35] The Plaintiff whilst accepting that the Understanding and New Board Understanding are not in writing, maintained that breach of oral agreements and understandings are sufficient to mount a minority oppression claim under Section 346 CA 2016 and that the Plaintiff, being a nominee of DK, is entitled to commence a minority oppression claim based on the oppressive actions against its beneficial owner DK, otherwise it argued, “If not, surely Impresive Circuit itself would have been struck out.” At all times, Impresive Circuit acts through DK, and Impresive Circuit through DK nominated Balasingam to be appointed to the Board pursuant to the New Board Understanding and relied on the English High Court decision in Atlasview Ltd v Brightview Ltd [2004] 2 BCLC 91 which was followed by Wong Kian Kheong J in Charles Koo Ho-Tung v Koo Lin Shen [2015] MLJU 910. [36] Having given my anxious consideration to the facts, circumstances and submissions relied upon by learned counsel for the parties in support 23 of their contentions in this action, I accept the arguments of the Defendants and find that the complaint of oppression grounded on the said “Understanding” and/or “New Board Understanding” must necessarily fail. [37] I am of the view that the fact that the Plaintiff, Impresive Circuit was not struck out does not equate to it being entitled to rely on DK’s grievances. There was no finding made by Azizul Azmi Adnan J in Datuk Kasi Palaniappan & Anor v Setia Haruman Sdn Bhd & Ors [2019] 9 MLJ 32; [2018] 1 LNS 1344 on this and Wong Chee Lin J in Impresive Circuit Sdn Bhd v Setia Haruman Sdn Bhd & Ors [2019] MLJU 1862 did not rule to the effect that the Plaintiff can rely on DK’s grievances. She said at para 35 of her judgment: “On the assumption that those issues are relevant issues for the purpose of Enclosure 107, I am of the view that there are disputes of material facts on which the Plaintiff is entitled to cross examine the deponents of the various affidavits affirmed on behalf of the Defendants. Suffice it to say that allegations of fact by the Plaintiff in respect of the breach of the Understanding and New Board Understanding have been denied by the Defendants so there are disputes of fact.” (emphasis added) [38] I find that the said “Understanding” and/or “New Board Understanding were made between two non-members of the Company. As such DK’s complaint is not a complaint member qua member pursuant to the Shareholders’ Agreement and/or the Articles of Association. When DK was struck out as a Plaintiff in this action due to lack of locus standi, he ceased to be a complainant of oppression in this action. [39] S. 2 of the CA 2016 defines the word “member” as: 24 “(a) in the case of a company limited by shares, a person whose na me is entered in the register of me mbers as the holder for the time being of one or more shares in the co mpany; or (b) in the case of a company limited by guarantee, a person whose na me is entered in the register of me mbers;” [40] That oppression under the scope of s. 346 must affect the complainant member “qua member” is made clear by the authorities, inter alia by: (i) the Federal Court in Yeng Hing Enterprise Sdn Bhd v Liow Su Fah [1979] 1 LNS 130; [1979] 2 MLJ 240: At page 242 “A company does not take cognisance of trusts except in so far as is provided for in section 163 of the Companies Act, 1965 which should be read in conjunction with its articles of association which usually go beyond the statutory provision by stating that the company shall not be bound to recognise any equitable interest or any other right in a share except an absolute right in the registered holder. “ At page 243, 244 “The relief under that section would only be available to the respondent as a member of the appellant but he however holds only one share in it. His claim in these proceedings appears however to be predicated on his would-be entitlement to 1,200,000 or 1,199,999 shares in it but in respect of which he is not a member. The ground for relief under section 181(1)(b) would only be available to him in respect of any act which unfairly discriminates against or is otherwise prejudicial to him as a member of the appellant. He cannot in respect of his several claims be prejudiced as a member holding only one 25 share by reason of the appellant not having issued share certificates in favour of another member, namely, the 1st defendant. The respondent must be aggrieved as a member ex vi termini and not as a person claiming only an equitable interest in shares held by some other member of the appellant, in this case the 1st defendant, and article 10 of the appellant's articles of association makes the position clear ob majorem cautelam. Even if the respondent is entitled to institute a minority shareholder's action against the appellant for any reason, relief cannot be sought under section 181 merely because facts are established which would found a minority shareholder's action (Re Kong Thai Sawmill (Miri) Sdn Bhd (14)( at page 229)). (ii) Khor Lye Hock Anor Tan Soon Keh v Makassar Engineering & Construction Sdn Bhd & Ors [2011] 8 CLJ 476; [2010] MLJU 18 [10] It is a principle of the law relating to the grant of relief under section 181 that mismanagement in itself is not actionable. Disputes relating to policy or management do not entitle a member to relief under the section. More significantly the oppression in question must affect the petitioning member qua member. The acts complained of must affect the member in his capacity as a member, (see Re Chi Liung & Son Ltd. [1968] 1 MLJ 97 and Re Tong Eng Sdn. Bhd. [1994] 1 MLJ 451, 457 per Selventhiranathan J. Prayer (a):- This prayer relates to the removal of P1 as a Managing Director. It seeks to cancel the resolution dated 15 May 2009 that removed P1 as Managing Director. The complaint here and relief sought relates to P1's contractual position as Managing Director. It does not relate to his rights as a member. The Board of Directors, moreover is empowered under Article 91 of Table A to remove PL It is significant that he has not been removed as a director nor has any attempt been made to adversely affect his shareholding. In the matter of Tahansan Sdn. Bhd. [1984] 1 MLJ 204,211 Chan J. quoted Plowman J. in In re Lundie Brothers Ltd [1965] 1WLR1051:- 26 "...In my judgment he has wholly failed to do that His main grievance is, as he admitted in the witness box, that he has been ousted as a working director. That, it seems to me, has nothing to do with his status as a shareholder in the company at all. The same thing is equally true in regard to his complaint that his remuneration as a director of the company has been reduced. That relates to his status as a director of the company, and not to his status as a shareholder of the company." Chan J. then went on to hold: The fact that the petitioner in the present case was ousted as a director and that he was deprived of his directors' remuneration relates only to his status as a director, and not to his status as a shareholder. The court, therefore is not given jurisdiction in a situation like this to make an order under section 181." (iii) The Federal Court in Jet-Tech Materials Sdn Bhd & Anor v. Yushiro Chemical Industry Co Ltd & Ors and another appeal [2013] 2 CLJ 277; [2013] 2 MLJ 297 “[37] It was alleged by the appellants that Yushiro's conduct in refusing to allow Chen to remove Gan and Firdaos as directors of the company amounted to a breach of the shareholders agreement. In this regard we are in agreement with the submission of learned counsel for the respondents that breaches of a shareholders agreement cannot be a basis for bringing a petition under s 181. A complaint under s 181 of the CA must be confined to matters relating to the affairs of the company. Shareholders' agreement and breach of the same clearly are not matters relating to the affairs of the company. They are private matters enforceable by the parties to the shareholders agreement (see Beh Chun Chuan v Paloh Medical Centre Sdn Bhd & Ors [1999] 3 MLJ 262, Tuan Haji Ishak bin Ismail & Ors v Leong Hup Holdings Bhd and other appeals [1996] 1 MLJ 661 and Russel Northern Bank Development Corp Ltd & Ors [1992] BCLC 1016).” 27 [41] The Plaintiff said the Understanding /New Board Understanding is oral. It is not stated in affidavits nor put to the deponents who were cross- examined that such oral agreement or understanding exists. On the evidence before the court, I find the oral Understanding /New Board Understanding have not been proven on a balance of probability. [42] The Plaintiff posited that DK was not cross examined and as such his evidence is deemed accepted. I find this argument misconceived. The Defendants have no obligation to cross examine DK as the Plaintiff bears the burden of proof on the Understanding /New Board Understanding and conspiracy. Until the burden of proof is discharged by the Plaintiff, there is no burden nor obligation or duty on the Defendants to cross examine DK. In this regard, it is trite law that the Plaintiff, had both the “burden of proof” to make out a prima facie case as well as the initial onus of proof to adduce evidence to prove its claim. The onus of proof would only shift to the Defendants if the Plaintiff had made out a prima facie case. See for eg. The Federal Court decision in Letchumanan Chettiar Alagappan @ L Allagappan (as executor to SL Amameloo A chi alias Sona Lena Alamelo Acho, deceased) & Anor v Secure Plantation Sdn Bhd [2017] 4 MLJ 697. [43] Even if I am wrong, and it is true that there was such an Understanding /New Board Understanding, it is a private arrangement bet DK and TSMK, and they are not the Plaintiff’s grievances but are DK’s complaints – these are not complaints “qua member” against the other defendants to trigger s. 346(1). The Plaintiff is an entirely distinct, separate entity and personality from DK. Not only that, such complaints or disputes do not constitute “affairs of the Company”. 28 [44] Atlasview on which counsel for the Plaintiff sought to rely on in my view is of no assistance to the Plaintiff on the point in issue as that case can be clearly distinguished as the position in the matter before the court is quite different. In Atlasview, formerly JGR Nominees Ltd, the investment agreement was entered into by all shareholders and new shareholders of Brightview Ltd, the company. Mr. and Mrs. Barton were parties to the investment agreement and complained of breach of the investment agreement. Mrs. Barton’s shares in the company were held by JGR Nominees Ltd as a nominee shareholder. JGR Nominees Ltd was not a party to the investment agreement. The issue was, could Mr. and Mrs Barton who were parties raise breach of the investment agreement entered into by them with the other shareholders in an oppression petition through the nominee JGR Nominees Ltd. It was undisputed that JGR was Mrs Barton’s nominee. The court explained in the context of the striking out application before the court, that it was properly arguable under s. 459 of the UK Companies Act that interest as a shareholder was capable of including the economic and contractual interest of the beneficial owner. Whilst Mrs Barton was a party to the investment agreement, she was not a shareholder and whilst JGR Nominees Ltd is a shareholder, it was not a party to the investment agreement therefore leaving both without recourse, and this arbitrary result would not have been intended by the parliamentary draftsman. [45] In Charles Koo Ho-Tung v Koo Lin Shen [2015] MLJU 910, the registered shareholder is the executor; the beneficiaries of the estate had no choice and could only advance their grievances through the executor as registered shareholder. In our case, it was DK “himself who had arranged his holdings in the affected companies in the manner that they 29 appear” as found by Azizul Azmi Adnan J in Datuk Kasi Palaniappan & Anor v Setia Haruman Sdn Bhd & Ors (supra). There was no appeal against that decision. [46] In our case, unlike Atlasview where all shareholders and new shareholders were party to the investment agreement, the personal dispute is between two non-shareholders. Such a dispute does not trigger the scope of s. 346: Jet-Tech Materials Sdn Bhd & Anor v Yushiro Chemical Industry Co Ltd & Ors and another appeal [2013] 2 CLJ 277; [2013] 2 MLJ 297 and applying Yeng Hing Enterprise Sdn Bhd v Liow Su Fah [1979] 1 LNS 130; [1979] 2 MLJ 240 as discussed in paragraph 36 of this judgment. Stare decisis binds this court as opposed to the English High Court case of Atlasview. [47] Further, to suggest that complaints of a “member” of a company includes someone [DK] other than the registered shareholder (Plaintiff) will lead to a strained construction of s. 2 and s. 346 CA 2016. The plain words of these 2 sections simply do not admit of such a construction. S. 346 can only be triggered when the act complained of relate to the affairs of a company of which the complainant is a member or debenture holder. I therefore agree with counsel for the 2nd to 6th Defendants that if shareholders of a member are allowed to ventilate their grouses, then the floodgates will be opened for actions on s. 346. [48] In any case, after DK was struck-out as a plaintiff, the Plaintiff failed to amend the Amended Originating Summons or the Plaintiff’s Affidavit to reflect the position that it is now taking – that it is claiming for breach of an oral Understanding and New Board Understanding on behalf of its alleged beneficial owner, DK. 30 [49] A company is governed by its memorandum and articles of association, now called the constitution. [50] In Tuan Haji Ishak bin Ismail's case, Mahadev Shanker JCA held at p 692, that: “… if they regarded these matters as important, we think it was imperative not only that agreements on such matters should have been put into writing but also the articles of association should have been amended so as to substantiate the claim that is being made.” [51] I find it is most curious that if there was such an understanding as claimed, of crucial significance is that the Plaintiff and/or DK did not cause the articles of association to be amended to reflect such understanding, particularly when TSMK retired from the Board in 2015. As pointed out by counsel for the 2nd to 6th Defendants, DK is not a ‘country yokel’ as described in Abdol Mulok Awang Damit v Perdana Industri Holdings Bhd [2003] 3 CLJ 497 at page 502. On the contrary he is a professional architect, and the Plaintiff described him in its submissions at para 10 c as “chairman of the EC and DK would always spearhead business strategy and all financial and corporate matters”. [52] As such it is the memorandum and articles of association that govern the affairs of the company, including the appointment of directors. The shareholders are bound by it, and there is no room to imply the Understanding and New Board Understanding here. [53] Additionally, save for what is set out in the articles of association, the other shareholders in the Company owe no duty to the Plaintiff how they exercise their vote - Tuan Haji Ishak bin Ismail v Leong Hup Holdings Bhd and other appeals [1996] 1 MLJ 661. 31 [54] In Pan-Pacific Construction Holdings Sdn Bhd v Ngiu-Kee Corp (M) Bhd & Anor (supra), the Federal Court stated: [34] …A share is a property which its holder as of right is entitled to utilize it in any manner he may wish. (See: Pender v Lushington (1877) 6 Ch D 70; Foss v Harbottle [supra]). (See also: 'Fairness and Good Faith as a precept in the Law of Corporations and other Business Organizations by Charles W. Murdock- Vol. 36 Loyola University Chicago Law Journal 551[2004-2005]').. [55] Notwithstanding that it is the memorandum and articles of association that govern the affairs of the company, in Ebrahimi v Westbourne Galleries Ltd [1972] 2 All ER 492; [1973] AC 360 the House of Lords elucidated the basis which enable the court to subject the exercise of legal rights to equitable considerations of a personal character arising between individuals which might make it inequitable to insist on legal rights or to exercise them in a particular way. Lord Wilberforce explained (at pp 379–380): “My Lords, in my opinion these authorities represent a sound and rational development of the law which should be endorsed. The foundation of it all lies in the words 'just and equitable' and, if there is any respect in which some of the cases may be open to criticism, it is that the courts may sometimes have been too timorous in giving them full force. The words are a recognition of the fact that a limited company is more than a mere judicial entity, with a personality in law of its own: that there is room in company law for recognition of the fact that behind it, or amongst it, there are individuals, with rights, expectations and obligations inter se which are not necessarily submerged in the company structure. That structure is defined by the Companies Act 1948 and by the articles of association by which shareholders agree to be bound. In most companies and in most contexts, this definition is sufficient and exhaustive, equally so whether the company is large or small. The 'just and equitable' provision does not, as the respondents suggest, entitle one party 32 to disregard the obligation he assumes by entering a company, nor the court to dispense him from it. It does, as equity always does, enable the court to subject the exercise of legal rights to equitable considerations; considerations, that is, of a personal character arising between one individual and another, which may make it unjust, or inequitable, to insist on legal rights, or to exercise them in a particular way. It would be impossible, and wholly undesirable, to define the circumstances in which these considerations may arise. Certainly the fact that a company is a small one, or a private company, is not enough. There are very many of these where the association is a purely commercial one, of which it can safely be said that the basis of association is adequately and exhaustively laid down in the articles. The superimposition of equitable considerations requires something more, which typically may include one, or probably more, of the following elements: (i) an association formed or continued on the basis of a personal relationship, involving mutual confidence — this element will often be found where a pre-existing partnership has been converted into a limited company; (ii) an agreement, or understanding, that all, or some (for there may be 'sleeping' members), of the shareholders shall participate in the conduct of the business; (iii) restriction upon the transfer of the members' interest in the company — so that if confidence is lost, or one member is removed from management, he cannot take out his stake and go elsewhere. It is these, and analogous, factors which may bring into play the just and equitable clause, and they do so directly, through the force of the words themselves. To refer, as so many of the cases do, to 'quasi-partnerships' or 'in substance partnerships' may be convenient but may also be confusing. It may be convenient because it is the law of partnership which has developed the conceptions of probity, good faith and mutual confidence, and the remedies where these are absent, which become relevant once such factors as I have mentioned are found to exist: the words 'just and equitable' sum these up in the law of partnership itself. And in many, but not necessarily all, cases there has been a pre-existing partnership the obligations of which it is reasonable to suppose continue to underlie the new company structure. But 33 the expressions may be confusing if they obscure, or deny, the fact that the parties (possibly former partners) are now co-members in a company, who have accepted, in law, new obligations. A company, however small, however domestic, is a company not a partnership or even a quasi-partnership and it is through the just and equitable clause that obligations, common to partnership relations, may come in.” [56] If a company is a quasi- partnership, it will not be governed strictly by its articles of association as just and equitable principles under Ebrahimi will be superimposed. However, if the company is not a quasi- partnership, there will be no scope for the superimposition of just and equitable principles under Ebrahimi, and the company will be governed strictly by its articles of association. [57] In this case, no evidence was led by the Plaintiff that there is a relationship of mutual trust and confidence between it, TSMK, UEM, Country Heights and Landmarks when the Company was set up. [58] The Plaintiff furthermore, has not proven that the Understanding and New Board Understanding is common to all shareholders nor the legitimate expectation it claimed is based on such understandings or on any provision of the memorandum and articles of the Company: Tuan Haji Ishak bin Ismail v Leong Hup Holdings Bhd [1996] 1 MLJ 661; Loh Siew Cheang on “Corporate Powers, Controls, Remedies and Decision- Making” [1996] MLJ 152) where the learned author said: "Sometimes, common understandings or intentions between parties give rise to legitimate expectations which are not submerged into the corporate structure of a company. This is particularly true in small companies founded upon mutual trust and confidence or in family companies, though, in theory, legitimate expectations may also be created in large private companies or 34 even public companies. In reality, it must be very rare that legitimate expectations can be proved to exist in large private companies and in public companies because it must be shown that the understandings or intentions are common to all the shareholders and is not the result of a private bargain between some but not all the shareholders." [59] In Eng Man Hin & Anor v King's Confectionary Sdn Bhd [2006] 4 MLJ 421, Ramly J (as his Lordship then was) opined: “[44] It is to be noted that the petitioners, in the present case alleged 'an intention' in para 6 of the petition. The petitioners had failed to aver that there is an agreement or understanding between the parties with regards to the alleged sharing of management control of the first respondent. The petitioners have not shown by whom and how the agreement or understanding was made with each of the second to fifth respondents. Since to restrain each of the second to fifth respondents, it is incumbent on the petitioners to show that each of them has made such an agreement with the petitioners. In the absence of such an agreement, it would be unfair to restrain any of the second to fifth respondents, who did not enter into such an agreement or undertaking with the petitioners. Without such an agreement, the question of 'breach' does not arise at all. In the circumstances, a unilateral intention unannounced by the petitioner is not sufficient. The petitioner must prove the existence of such an alleged underlying understanding is common to all shareholders, (see Re Ringtower Holdings Pic (1989) 5 BCC 82; Tuan Haji Ishak bin Ismail v Leong Hup Holdings Bhd [1996] 1 MLJ 661; Re Blue Arron Pic (1987) BCLC 585). It must be shown that the understandings or intentions are common to all the shareholders and is not the result of a private bargain between one but not all the shareholders, (see also Loh Siew Cheang v Corporte Powers, Controls, Remedies and Decision-Making [1996] MLJ 152).(Emphasis added) [60] On the contrary, I find that by no stretch of imagination can the inception of the Company be called a quasi-partnership. Significantly, the Company was incorporated in 1997 as a special purpose vehicle, and 35 formed as a Joint Venture tasked by the Government to undertake a special project of developing CyberJaya. The Company was set up purely as a business venture to develop CyberJaya; it was not a lone venture between DK and TSMK only. [61] On the facts, I am of view that as the Company is not a quasi- partnership, and as such, there is no basis here to invoke the just and equitable principles in Ebrahimi. The doctrine of legitimate expectation which the Plaintiff attempts to invoke will not apply in this case where DK has not been vigilant in protecting his rights when he had the opportunity to do so to prudently document his right in the articles of association, or by a shareholders’ agreement. [62] The Plaintiff equally cannot rely on the Shareholders’ Agreement as it was not a party to it. In any case, reliance on the Shareholders’ Agreement will not help the Plaintiff one whit. The Shareholder’s Agreement provided inter alia that: “Preamble: (B) The principal object of Cyberview are to develop an area located next to Putrajaya (the new Malaysian administrative centre) and measuring approximately 2800 hectares to be known a “Cyberjaya" which will be a dedicated intelligent city for multimedia companies with super-intelligent buildings, state-of-the-art multimedia infrastructure, office facilities, business- friendly enterprise zones, first-class resort hotels, service apartments hillside houses, condominiums, shopping and recreational facilities (hereinafter referred to as the “Cyberjaya Project”). (C) Each of the parties hereto are established developers and contractors with extensive knowledge and experience in carrying our mixed developments and infrastructures projects and have been invited by Multimedia Development 36 Corporation Sdn Bhd to participate in the Cyberjaya Project together with other parties vide their shareholding participation in Cyberview (hereinafter referred to a “the Cyberview venture”). (D) The parties have agreed to combine their respective resources and experiences for the purposes of participating in the Cyberjaya Project and pursuant thereto, agree to participate in the Cyber Venture vide the JV Company (hereinafter defined) and hereby agree to enter into this Agreement to regulate their relationship with each other and their respective rights and obligations as shareholders of the JV Company upon the terms and conditions herein contained.” [63] Clause 16.5 of the Shareholders’ Agreement expressly stated that the participation of the four (4) shareholders is not a Partnership. [64] Clause 16.5 expressly excludes a partnership, thereby excluding the Ebrahimi type of quasi-partnership principles from being applied. [65] Besides, the Shareholders’ Agreement lapsed with the exit of Country Heights and Landmarks. Even if it subsist, the Plaintiff with its 12.5 % equity is caught by Clause 7.2 which expressly provides a shareholder with 12.5 % shares or less is not entitled to a board seat. [66] Moreover, the principle in Jet-Tech (supra) was affirmed by the Federal Court in Looh Siong Chee v Numix Engineering Sdn Bhd & Ors and other appeals [2015] 4 MLJ 561 – “Shareholder’s Agreement and breaches of the same are clearly not matters pertaining to the affairs of the company. They are private matters enforceable by the parties to the Shareholder’s Agreement. “Following these cases, DK’s complaints that he was not nominated by the 10th Defendant to be a director of the Company is best addressed in suit KLHC WA-22NCC-500-08/2018. 37 [67] That is not all. I accept TSMK’s oral evidence that it is clear from the conduct of parties that TSMK always wanted to have majority control over any company in which he and DK participated in. In my view, a good relationship or respect for DK’s ability to manage for the common good of the company’s business is different from mutual trust and confidence needed for a quasi-partnership, which must be shown to exist from the date of inception. [68] The Plaintiff is a minority shareholder of the Company, and applying the principle spelt out in Re Kong Thai Sawmill (supra), it must accept majority rule. A mere dissatisfaction with the wishes of the majority is not oppression. Even if there was an understanding founded on mutual trust, confidence and good faith, which is not the case here, the fact of a breakdown per se between DK and TSMK without more, is insufficient to bring the complaint within s. 346 of the CA 2016. The Court of Appeal decision in Hoy Pak Kwai v Leong Kon Fah & Ors [2007] 1 MLJ 508; [2007] 1 CLJ 121 commends itself to me: “[66] As to the appellant's claim of there being a breach of fiduciary duty, I find this absurd. As correctly pointed out by the trial judge, the first and second respondents are substantial shareholders and are directors of API. They owe no fiduciary duty to the appellant in exercising their vote at board meetings and as shareholders they owe no duty to anybody as to how they exercise their vote (Tuan Haji Ishak bin Ismail v Leong Hup Holdings Bhd and other appeals [1996] 1 MLJ 661). And the 'mere use of voting power at board meetings or at a general meeting to secure the passing of resolutions which other members of the board or shareholders oppose, would not in general constitute oppression for the purpose of the section or for any other purpose. For a petition to succeed, it must be shown that there has been oppression in a real sense of members qua shareholders, and not merely 38 a subordination of their wishes to the power of the voting majority (Re Harmer Ltd [1959] 1 WLR 62 at p 87 per Romer LJ' accepted in Dato Toh Kian Chuan v Swee Construction & Transport Company (Malaya) Sdn Bhd [1996] 1 MLJ 730.” (emphasis added) [69] The 2nd to 6th Defendants and 10th to 12th Defendant’s basis not to re-elect DK was not unreasonable or without any foundation. I accept the 2nd to 6th Defendants and 10th to 12th Defendant’s logical reasons that DK was not re-elected to the Board of the Company as a result of DK, Felina and TSMK being blacklisted by the Ministry of Housing. In analysing the motives of the majority from the entire evidence available to the court, I am inclined to accept that this non re-election of DK ultimately is in the best interest of the Company where the progress and licence of its development known as Ceria Residence was at risk. [70] Even if DK has a reasonable expectation to be on the Board of the Company, this does not amount to a legitimate expectation. Lord Wilberforce’s exhortation in the Ebrahimi case (supra) bears repetition that “...The superimposition of equitable considerations requires something more,… ”. As such, there is no basis to the complaint that the Plaintiff was excluded from the management of the Company in a manner that is envisaged under s. 346 of the CA 2016. There is no permanent right to a directorship unless it is entrenched specifically in the Memorandum and Articles of association. An illustration of this is the case of Re Chi Liung & Sons Ltd. (1968) 1 MLJ 97 where the founding director Chi Liung’s position was ensconced as a permanent director until she resigns the office or dies. Under Singapore’s s. 216, the equivalent of our s. 346, in the case of Re Tri-Circle Investment Pte. Ltd. (1993) 2 SLR 523, Judith Prakash J held: 39 "the removal of the first and second petitioners as directors did not entitle them to relief under section 216. They did not have entrenched places on the board nor should they have expected to be able to remain on the board..." Conspiracy [71] This claim of conspiracy was predicated on assertions in: (i) paragraphs 162 to 164 of DK ’s affidavit affirmed on 21.07.2017 which read: “ 162. At the AG M of 30.6.2016, no minees of TSMK vote d against my re-election whilst no minees of UEM abstained fro m voting. 163. As the usual practice throughout the history of Setia Haru man was to re -elect retiring directors, I verily state that UEM’s no minees could not have abstained withou t prior knowledge that TSMK’s no minee s did not intend to re-elect me as a director of Setia Haruman. 164. In short, I verily state that UEM an d its nominees had conspired with TSMK and his no minee s and/or assisted in the breach of the ter ms of the Ne w Bo ard Understanding and/or the Plaintiffs’ legitimate e xpe ct ation to have their no minees appointed to the board of Setia Haruman, an d to jointly manage Setia Haru man with the no mine e directors of other shareholders. Such n on re -election is in fact, a re moval of director.” (ii) the Plaintiff’s affidavit of 9.7.2018 - where DK states ”the oppression and prejudice occasioned on me also arises 40 from the fact that UEM had abstained from voting in favour of my re-election and this can only be explained by the conspiracy with TSMK and his nominees on the board of Setia Haruman, in breach of the new board understanding.” [72] It seems, previously, UEM had always voted in favour of DK’s re- election and had executed the resolution for Lee, Balasingam’s replacement. But is this enough to show a conspiracy? With the utmost respect, I opine not. [73] The Court of Appeal in Cubic Electronic Sdn Bhd (In Liquidation) v MKC Corporate & Business Advisory Sdn Bhd & Anor Appeal [2016] 3 MLJ 797; [2016] 3 CLJ 676 in a judgment delivered by Mohd Zawawi Salleh JCA (as his Lordship then was) explained: “[11] There are two kinds of conspiracy, the elements of which are distinct: (a) unlawful means conspiracy: a conspiracy in which the participants combine to perform acts which are themselves unlawful (under either criminal or civil law); and (b) lawful means conspiracy: a combination to perform acts which, although not themselves per se unlawful, are done with the sole predominant purpose of injuring the claimant — it is in the fact of the conspiracy that the unlawfulness resides (see Milicent Rosalind Danker and Anor v Malaysia- Europe Forum Bhd & Ors [2012] 2 CLJ 1076 (HC); SCK Group Bhd & Anor v Sunny Liew Siew Pang & Anor [2011] 4 MLJ 393 (CA)). [12] The distinction between the two was succinctly elucidated by Lord Bridge in Lonrho plc v Fayed [1991] 3 All ER 303 as follows: Where conspirators act with the predominant purpose of injuring the plaintiff and in fact inflict damage on him, but do nothing which would 41 have been actionable if done by an individual acting alone, it is in the fact of their concerted action for that illegitimate purpose that the law, however anomalous it may now seem, finds a sufficient ground to condemn their action as illegal and tortious. But when conspirators intentionally injure the plaintiff and use unlawful means to do so, it is no defence for them to show that their primary purpose was to further or protect their own interests; it is sufficient to make their action tortious that the means used were unlawful. [13] The elements required to bring an action for unlawful means conspiracy and lawful means conspiracy are as follows: A combination or agreement between two or more individuals It is not necessary to show that there was anything in the nature of an express agreement, whether formal or informal. The court looks at the overt acts of the conspiracy and infers from those acts that there was agreement to further the common object of the combination. It is sufficient that two or more persons combine with the necessary intention or that they deliberately co- operate, albeit tacitly, to achieve a common end (R v. Siracusa [1990] 0 Cr App R 340). Neither is it necessary that all those involved should have joined the conspiracy at the same time; but all those said to be parties to the conspiracy should be sufficiently aware of the surrounding circumstances and share the same object for it properly to be said that they are acting in concert. The question in relation to any particular scheme or enterprise in which only one or some of the alleged conspirators can be shown to have directly participated is whether that enterprise fell within the overall scope of their common design. (R v. Simmonds [1969] 1 QB 691). It is possible for a conspirator to join later. However, a person is only liable for the damage that is suffered from the time that they join the conspiracy; they are not liable retrospectively for the damage that has been suffered prior to their joining (O'Keefe v. Walsh [1903] 2 IR 681)." 42 [74] In this regard, I accept the 7th to 9th Defendants’ assertion that UEM abstained from voting on the re-election of DK as UEM, being aware of the differences between DK and the other shareholders of the Company, did not wish to get involved. Counsel for the 7th to 9th Defendants rightly urged upon the court that there is no reason for TSMK and his nominees to conspire with UEM on the re-election of DK. As the majority shareholders, TSMK and his nominees are clearly in the position to successfully vote against the re-election, without UEM’s involvement. [75] [ Having regard to the totality of the evidence before the court, I find that the Plaintiff has not discharged the burden of proving an agreement between TSMK, his nominees and UEM with a common intention to injure the Plaintiff; or proven overt acts were carried out in execution of that agreement and that such actions had caused the Plaintiff damage. I therefore hold there is no clear or convincing evidence on conspiracy and it is not proven. In my view, the Plaintiff’s contention that UEM had always voted in favour of DK’s re-election leaves much to conjecture. In my judgment, the mere fact of UEM’s abstaining cannot be a basis to infer an agreement between UEM, TSMK and TSMK’s nominees with the predominant purpose to injure the Plaintiff’s interest in the Company. Nor has injury been proven. [76] In addition, this claim of conspiracy is DK’s complaint - not that of the Plaintiff and thus, not a member qua member complaint. [77] Not only that. In my view, what is significant is that the conspiracy alleged in this action was inextricably intertwined with the alleged breach of the New Board Understanding. It follows that the alleged conspiracy is dependent on whether the alleged breach of the New Board 43 Understanding is established. When the breach of the New Board Understanding is not established, no unlawful act or means can be proven. As such, this claim failed. Non-payment of dividends for the year 2016 [78] Although a ground of complaint, the Plaintiff did not address this issue of non- payment of Dividends for the year 2016 in its submissions and appeared to have abandoned this grievance. [79] In any event, I accept the Defendants assertions that due to tight cash flow, no dividends were paid for 2016. This non-payment of dividends was not discriminatory of or targeted specifically at the Plaintiff as the other shareholders were also similarly not paid. The Plaintiff was not treated any differently from the other shareholders on the non- payment of dividends. [80] It is trite that it is within the discretion of the directors and an internal management decision whether to declare dividends or not. It is a general rule that the court has no jurisdiction to interfere with the internal management of companies so long as they are being managed in accordance with the law. Suffice to say, there is no merit in this complaint. [81] Whilst I understand that the Plaintiff is locked in and aggrieved, however, I find on the totality of evidence before the court: (i) there is no Understanding or New Board Understanding between DK and TSMK; even if there is, on the facts of this case, it does not assist the Plaintiff for the reasons given; 44 (ii) the complaints of legitimate expectation and conspiracy failed; (iii) the non-declaration of dividends in 2016 does not amount to oppression; and (iv) oppression has not been made out. [82] For the sake of completeness, in a buy out of the complainant’s shares, s. 346(2) (c) states: “S.346(2) If on such application the Court is of the opinion that either or those grounds is established, the Court ma y make such order as the Court thinks fit with the view to bringing to an end or remedying the matters co mplained of, and without prejudice to the generality of subsection (1), the order may - (a) … (b) … (c) provide for the purchase of the shares or debentures of the co mpany by other me mbers or debentu re holders of the compan y or by the co mpany itself ; (d) … (e) …” [83] The very wording of s. 346(2) (c) clearly and explicitly handcuffs the buy out only to other members or debenture holders of the company or by the company itself. The 2nd to 8th Defendants are not members of the 45 Company. Anyhow, this question of buy out of the Plaintiff’s shares does not arise as oppression is not made out. [84] In conclusion, I cannot find, to paraphrase the words of Lord Wilberforce in Re Kong Thai Sawmill (supra) that there had been in the conduct of the affairs of the company a visible departure from the standards of fair dealing and a violation of the conditions of fair play which the Plaintiff as a shareholder in the Company was entitled to expect, or that in so acting the majority had crossed the line which divides rule by the majority from tyranny of the majority. Instead, I find on the facts that a case for oppression, disregard or unfairly discriminatory or prejudicial conduct, had not been made out under s. 346 of the CA 2016. The law as set out by the Federal Court in Pan - Pacific Construction Holdings Sdn Bhd v Ngiu - Kee Corporation (M) Sdn Bhd & Anor (supra, at para 25) bears repetition: “..., in order to succeed in its petition pursuant to s.181 the petitioner has to establish and ‘must eminently be determined according to the facts’ of this case that the affairs of the company are being conducted or that the powers of the directors are being exercised in an oppressive manner or in disregard of its interests, or to its prejudice some unfairly discriminatory or prejudicial act of the company has been done or threatened, or that some resolutions of the members, debenture holders or any class of them has been passed or is proposed to be passed”. [85] For the reasons given, the Amended OS is dismissed with costs of RM100,000 subject to allocator to be paid by the Plaintiff to each set of solicitors for the 2nd to 6th Defendants, 7th to 9th Defendants and 10th to 12th Defendants. In awarding costs, I have taken into account the matters set out in O 59 r. 16 Rules of Court 2012, recognised the time spent on 46 research, prepare affidavits, and submissions, the skill required, seniority of counsel, the number and importance of documents involved and 3 days of cross-examination/re-examination of 3 deponents of affidavits. [86] It remains for me to record my appreciation to learned counsel for the respective parties for the enormous efforts expended on their helpful submissions. I do not propose to burden this judgment by citing at length each of the authorities relied upon by learned counsel. Dated: 14th August 2021 - sgd - ……………………….. Liza Chan Sow Keng Judicial Commissioner High Court of Malaya at Kuala Lumpur COUNSEL: For the Plaintiff : Ranjit Singh, CM Owee & Shermaljit Singh (Messrs Owee & Ho) For the 2nd-6th Defendants : Datuk Seri Gopal Sri Ram, Dato’ Pathmanathan, Shirin Pathmanathan & Fatin Muzfirah (Messrs M Pathmanathan & Co.) For the 1st, 10th & 12th : Eric Clement Defendants (Messrs Abd Halim Ushah & Assoc.) For the 7th-9th Defendants : Vijay Kumar & Chan Mun Yew (Messrs Lee Hishammuddin Allen & Gledhill) 47 CASES REFERRED: Aik Ming (M) Sdn Bhd & Ors v Chang Ching Chuen [1995] 2 MLJ 770 Re Kong Thai Sawmill (Miri) Sdn Bhd; Kong Thai Sawmill (Miri) Sdn Bhd & Ors v Ling Beng Sung [1978] 2 MLJ 227 Pan-Pacific Construction Holdings Sdn Bhd v Ngiu-Kee Corp (M) Bhd & Anor [2010] MLJU 269; [2010] 6 CLJ 721 Kumagai Gumi Co Ltd v Zenecon-Kumagai Sdn Bhd & Ors and another application [1994] 2 MLJ 789 Re Tivoli Freeholds Ltd [1972] VR 445 Jaya Medical Consultants Sdn Bhd v Island & Peninsular Bhd & Ors [1994] 1 MLJ 520 Tan Kian Hua v Colour Image Sdn Bhd & Ors [2004] 6 CLJ 174; [2004] MLJU 178 Wong Kim Yoon v Cheong Kim Hong & Ors [2019] MLJU 1589 Tob Chee Hoong v Tob Chee Choong & Ors [2017] MLJU 1303; [2017] I LNS 1256 Genisys Intergrated Engineers Pte Ltd v UEM Genisys Sdn Bhd & Ors [2008] 6 MLJ 237 Atlasview Ltd v Brightview Ltd [2004] 2 BCLC 91 Charles Koo Ho-Tung v Koo Lin Shen [2015] MLJU 910 Datuk Kasi Palaniappan & Anor v Setia Haruman Sdn Bhd & Ors [2019] 9 MLJ 32; [2018] 1 LNS 1344 Impresive Circuit Sdn Bhd v Setia Haruman Sdn Bhd & Ors [2019] MLJU 1862 Yeng Hing Enterprise Sdn Bhd v Liow Su Fah [1979] 1 LNS 130; [1979] 2 MLJ 240 Khor Lye Hock Anor Tan Soon Keh v Makassar Engineering & Construction Sdn Bhd & Ors [2011] 8 CLJ 476; [2010] MLJU 18 48 Jet-Tech Materials Sdn Bhd & Anor v Yushiro Chemical Industry Co Ltd & Ors and another appeal [2013] 2 CLJ 277; [2013] 2 MLJ 297 Letchumanan Chettiar Alagappan @ L Allagappan (as executor to SL Amameloo A chi alias Sona Lena Alamelo Acho, deceased) & Anor v Secure Plantation Sdn Bhd [2017] 4 MLJ 697 Charles Koo Ho-Tung v Koo Lin Shen [2015] MLJU 910 Yeng Hing Enterprise Sdn Bhd v Liow Su Fah [1979] 1 LNS 130; [1979] 2 MLJ 240 Tuan Haji Ishak bin Ismail v Leong Hup Holdings Bhd and other appeals [1996] 1 MLJ 661 Abdol Mulok Awang Damit v Perdana Industri Holdings Bhd [2003] 3 CLJ 497 Ebrahimi v Westbourne Galleries Ltd [1972] 2 All ER 492; [1973] AC 360 Eng Man Hin & Anor v King's Confectionary Sdn Bhd [2006] 4 MLJ 421 Looh Siong Chee v Numix Engineering Sdn Bhd & Ors and other appeals [2015] 4 MLJ 561 Hoy Pak Kwai v Leong Kon Fah & Ors [2007] 1 MLJ 508; [2007] 1 CLJ 121 Re Chi Liung & Sons Ltd. (1968) 1 MLJ 97 Re Tri-Circle Investment Pte. Ltd. (1993) 2 SLR 523 Cubic Electronic Sdn Bhd (In Liquidation) v MKC Corporate & Business Advisory Sdn Bhd & Anor Appeal [2016] 3 MLJ 797; [2016] 3 CLJ 676 STATUTES/LEGISLATION REFERRED: Section 2, s. 346 of the Companies Act 2016 Section 181 of the Companies Act 1965 Order 59 rule 16 Rules of Court 2012