Lim Chin Lee CK Lim Plantations Sdn Bhd Lim Chin Khuan

HIGH COURT OF MALAYA IN SHAH ALAM IN THE STATE OF SELANGOR DARUL EHSAN, MALAYSIA CIVIL APPEAL NO.: BA-12ANCC-44-06/2021 ________________________________________________________ BETWEEN LIM CHIN LEE [IDENTITY CARD NO. : 640423-10-7391] ..... APPELLANT AND CK LIM PLANTATIONS SDN BHD [COMPANY NO. : 199601012744 (385094-X)] LIM CHIN KHUAN [IDENTITY CARD NO. : 560609-10-6223] ….. RESPONDENTS GROUNDS OF JUDGMENT (Dismissal of O. 18 r. 19 Application) INTRODUCTION 1. In a court case where there is counterclaim by the defendant against the plaintiff and an additional co-defendant in the counterclaim and there are more than four pleadings filed and appeals are made against the trial court’s decisions in respect of interlocutory 1 application in connection with the pleading or interlocutory matters in the counterclaim, it is more convenient and less confusing in the appeal to refer to the parties by names or abbreviations of identities instead of referring to them as “plaintiff in the original action”, “defendant in the original action”, “plaintiff in the counterclaim”, “1st defendant in the counterclaim” and “2nd defendant in the counterclaim”. This is what this Court will do in the present appeal. BACKGROUND FACTS 2. The parties’ undisputed averments of the background facts are as summarised in the following paragraphs 3 to 8. 3. The Lim Chin Khuan (“CK Lim”) is the elder brother of Lim Chin Lee (“Lim CL): see paragraphs 18 and 20 of the Defence and Counterclaim in the original action [page 27 of the Appeal Records]. CK Lim does not deny paragraphs 18 to 20 of the Defence and Counterclaim but argues that these paragraphs are irrelevant [paragraph 17 of the Reply and Defence to Counterclaim [page 42 of the Appeal Records]. 4. According to Lim CL, in or around 1976, their father Lim Ba Chong @ Lim Kim Yeow (“the father”) started a family business which later expanded into a group of companies managed by the father and his 6 children including CK Lim and Lim CL: paragraph 21 of the Defence and Counterclaim in the original action [page 27 of the Appeal Records]. 2 5. Lim CL avers that in or around 1984 the father gave free company shares to his children including CK Lim and appointed some of them to manage and handle the family business, and that each individual acted as partner to earn profit and take care of the other partners’ interest and the interests of the family business as a whole: paragraph 22 of the Defence and Counterclaim in the original action [page 28 of the Appeal Records]. 6. It is pleaded by Lim CL that the group of companies of the partners in the Lim family are: (a) Vee Seng Development Sdn Bhd ( “VSD Sdn Bhd”); (b) Vee Seng Plantations Sdn Bhd; (c) Veetar Plantations Sdn Bhd; (d) Veetar Palm Oil Mill Sdn Bhd; (e) Lim Kim Yeow Holdings Sdn Bhd; and (f) LCS Capital Holdings Sdn Bhd. See paragraph 23 of the Defence and Counterclaim in the original action [page 28 of the Appeal Records]. 7. CK Lim does not deny paragraphs 21 to 23 of the Defence and Counterclaim but argues that these paragraphs are irrelevant [paragraph 18 of the Reply and Defence to Counterclaim [page 42 of the Appeal Records]. 8. Lim CL pleads that by Shareholders Agreement dated 12.7.2018 and Supplementary Agreement dated 26.9.2018, all the partners in the family business distributed all the profits and the assets of the family business between them: paragraph 24 of the Defence and 3 Counterclaim in the original action [pages 28 to 29 of the Appeal Records]. In paragraph 19 of the Reply and Defence to Counterclaim, CK Lim admitted that there was a Shareholders Restructuring Agreement dated 12.7.2018 [see page 42 of the Appeal Records]. DISPUTED AVERMENTS IN THE PLEADINGS 9. CK Lim pleads that by CIMB cheque No. 489128 dated 20.5.2015, CK Lim gave a friendly loan of RM1,000,000 to Lim CL: paragraphs 3 to 5 of the Statement of Claim [page 19 of the Appeal Records]. These allegations were denied by Lim CL who also pleads that any alleged loan from the Plaintiff-company to Lim CL would be an offence under the Companies Act 2016: see paragraphs 4(a) to 4(c) of the Defence and Counterclaim [page 23 of the Appeal Records]. 10. Further, Lim CL avers that the said money of RM1,000,000 was given to him by CK Lim as a family member and not as a Director of the Plaintiff-company: paragraph 4(d) of the Defence and Counterclaim [page 23 of the Appeal Records]. 11. Lim CL avers that CK Lim asked him to sign the payment voucher by stating that the money given was for part of the purchase price for a land in Telupid, Sabah and that it was a gift: paragraph 4(e) of the Defence and Counterclaim [page 23 of the Appeal Records]. 12. Lim CL avers that since 1992 CK Lim has been responsible for managing the business and profits of the Lim family and by reason thereof CK Lim gave the said money RM1,000,000 to Lim CL when 4 requested: paragraph 5 of the Defence and Counterclaim [page 24 of the Appeal Records]. 13. Lim CL pleads that all the partners in the family business distributed all the profits and the assets of the family business between them pursuant to a Supplementary Agreement dated 26.9.2018 read together with the Shareholders Agreement dated 12.7.2018: paragraph 24 of the Defence and Counterclaim in the original action [pages 28 to 29 of the Appeal Records]. In paragraph 19 of the Reply and Defence to Counterclaim, CK Lim admitted that there was a Shareholders Restructuring Agreement dated 12.7.2018 but denied the rest of the averments [see page 42 of the Appeal Records]. 14. Lim CL pleads that by the Supplementary Agreement dated 26.9.2018 read together with the Shareholders Agreement dated 12.7.2018, all the family members including CK Lim and Lim CL distributed the family business and settled all outstanding debts between them, and therefore, Lim CL does not owe any money to CK Lim: paragraph 6 of the Defence and Counterclaim in the original action [page 24 of the Appeal Records]. In paragraph 19 of the Reply and Defence to Counterclaim, CK Lim admitted that there was a Shareholders Restructuring Agreement dated 12.7.2018 but denied the rest of the averments [see page 42 of the Appeal Records]. 15. CK Lim pleads that according to the audit confirmation prepared by Messr CK Lim & Co, the said amount of RM1.000,000 was admitted by Lim CL as an amount owing by Lim CL to CK Lim: paragraph 6 5 of the Statement of Claim [page 19 of the Appeal Records]. This was denied by Lim CL who alleged that the signing of audit confirmation was a formality and he was misled by CK Lim into signing the same: paragraphs 7 and 8 of the Defence and Counterclaim [page 24 of the Appeal Records]. 16. By letters dated 30.7.2020 and 14.8.2020, CK Lim demanded for the said sum of RM1,000,000 but by Lim CL’s letter dated 7.8.2020, Lim CL denied the claim: paragraph 8 of the Statement of Claim [page 20 of the Appeal Records]. 17. In June 2021, CK Lim filed this suit claiming the said amount of RM1,000,000 from Lim CL. 18. Lim CL avers further or alternatively that the said money of RM1,000,000 was used to buy 20 acres of land at Telupid, Sabah and the said land has been used by the family business as the oil palm fruits collection centre until today, and therefore with the family settlement agreements CK Lim is not estopped from claiming the said money from Lim CL: paragraph 11 of the Defence and Counterclaim [page 25 of the Appeal Records]. These averments were denied by CK Lim: see paragraphs 10 to 10.2 of the Reply and Defence to Counterclaim [page 38 of the Appeal Records]. 19. Lim CL also avers that in breach of the Shareholders Agreement and the Supplementary Agreement CK Lim failed to pay RM8 million to the father but only paid RM4 million, and that its was Lim CL who helped CK Lim to pay RM4 million to the father: paragraph 6 15 of the Defence and Counterclaim [page 26 of the Appeal Records]. 20. In the Defence and Counterclaim, Lim CL repeated his averments regarding the family business. These repeated averments of Lim CL are denied by CK Lim: see paragraphs 17 to 20 of the Reply and Defence to Counterclaim [page 42 of the Appeal Records]. 21. Lim CL avers that in June 1995 CK Lim was appointed as the Managing Director of VSD Sdn Bhd, and the father entrusted the entire operations of VSD Sdn Bhd’s businesses including 1.193 acres of of land to CK Lim: paragraph 15 of the Defence and Counterclaim [page 26 of the Appeal Records]. This was not denied by CK Lim: see pages 40 to 44 of the Appeal Records. 22. Lim CL avers that VSD Sdn Bhd had been a very profitable company with profitable assets and millions of profits, the accounting statements of VSD Sdn Bhd for years 1995 to 2018 did not shown any satisfactory profit: paragraph 27 of the Defence and Counterclaim [page 29 of the Appeal Records]. This was denied by CK Lim: see paragraph 21 of the Reply and Defence to Counterclaim [page 42 of the Appeal Records]. 23. Lim CL avers that in 2015 he visited VSD Sdn Bhd’s land in Sabah and discovered that there were sand mining operations at VSD Sdn Bhd’s land which were not known to Lim CL or other partners of the family business: paragraph 28 of the Defence and Counterclaim [page 30 of the Appeal Records]. This was denied by CK Lim: see 7 paragraph 21 of the Reply and Defence to Counterclaim [page 42 of the Appeal Records]. 24. When queried by Lim CL regarding the sand mining activities, CK Lim could not give a clear answer regarding the profits from the sand mining activities. Eventually, CK Lim gave Lim CL RM1,000,000 to purchase the Telupid land: paragraph 29 of the Defence and Counterclaim [page 30 of the Appeal Records]. This was denied by CK Lim: see paragraph 21 of the Reply and Defence to Counterclaim [page 42 of the Appeal Records]. 25. Lim CL avers that CK Lim committed breaches of fiduciary duties towards the other partners of the family business: paragraphs 30 to 36 of the Defence and Counterclaim [pages 30 to 32 of the Appeal Records]. These allegations were denied by CK Lim: see paragraphs 23 to 25 of the Reply and Defence to Counterclaim [pages 43 and 44 of the Appeal Records]. 26. Among others, Lim CL avers that CK Lim was in conflict of interests and in breach of fiduciary duties by establishing the Plaintiff- company (with shares held by CK Lim, his wife and children) which carries out business similar to the family business of Lim family under the father: paragraphs 31 and 35 of the Defence and Counterclaim [pages 30 and 31 of the Appeal Records]. 27. Lim CL counterclaims for (a) there was a trust property and CK Lim held the property in trust; (b) declaration that the Plaintiff-company is a part of the group of companies under the father’s Lim family’s business; (c) an account stated in respect of all profits and trust 8 assets held by the Plaintiff-company and CK Lim; (d) an account stated of the Plaintiff-company’s profits from 1996 to 12.7.2018; (e) restitution of assets and profits to the partners of the Lim family business from 1996 to 12.7.2018; and ancillary orders: paragraph 37 of the Defence and Counterclaim [page 32 of the Appeal Records]. This was denied by CK Lim who also avers that Lim CL has no locus standi to make such counterclaims: paragraph 14.1 of the Reply and Defence to Counterclaim [page 41 of the Appeal Records]. LIM CL’S APPLICATION IN ENCLOSURE 27 IN THE SESSIONS COURT 28. In the Sessions Court, there were two interlocutory applications, namely (1) Enclosure 27: Lim CL’s application under O. 18 r. 19 for striking out the Plaintiff-company’s Reply dated 5.1.2021 in the counterclaim action; and (2) Enclosure 32: Lim CL’s application for discovery of documents. 29. After the Sessions Court dismissed both applications in Enclosure 27 and Enclosure 32, Lim CL filed two separate appeals, one against each of the decision in respect of each enclosure. 30. On 4th October 2021 this Court dismissed the appeal against the Sessions Court’s decision in respect of Enclosure 27 (Appeal No. BA-12ANCC-44-06.2021) but allowed in part the appeal against the Sessions Court’s decision in respect of Enclosure 32 (Appeal No. BA-12ANCC-42-06.2021). 9 31. Dissatisfied with the dismissal of the appeal against the decision in respect of Enclosure 27 (Appeal No. BA-12ANCC-44-06.2021) in connection with the O. 18 r.19 application, Lim CL has appealed against his Court’s said decision. 32. In support of the striking out application, Lim CL argues as follows: (1) The 1st Defendant in the counterclaim (CK Lim Plantation Sdn Bhd) after having filed the Reply in Enclosure 7 cannot file another “Reply and Defence to Counterclaim” with the 2nd Defendant (CK Lim) as seen in Enclosure 16. That, argues Lim CL, runs foul to established adjectival laws mainly on the principles of duplicity of pleadings. (2) In so far as it concerns the 2nd Defendant in the counterclaim (CK Lim), the filing of a reply to a Defence when he is not even a party to the main suit is also caught under the rule of an embarrassing pleadings and ought to be struck out. 33. In Bandar Builder Sdn Bhd v. United Malayan Banking Corporation Bhd [1993] 3 MLJ 36 (Tab 3) whereby the Supreme Court has repeated the striking out principles as follow:- (i) The principles over which the court acted when using his power under any of the paragraph O 18 R 19(1) Rules of High Court 1980 is clear. The continuous process under this rule should be used in cases that is clear and obvious only and the continuos process can only be used when it is clear that one demand or Answer must be on the face of it ‘obviously unsustainable’. It cannot be used with thorough examination of documents and facts of the 10 case to see whether the concerned party have the power of action or defence.” 34. The Federal Court in Seruan Gemilang Makmur Sdn Bhd v Kerajaan Negeri Pahang Darul Makmur [2016] 3 MLJ 1 (Tab 4) 1.(a) “[28] The basic test for striking out as laid down by the Supreme Court in Bandar Builder is that the claim on the face of it must be ‘obviously unsustainable’. The stress is not only on the word ‘unsustainable’ but also on the word ‘obviously’ ie the degree of unsustainability must appear on the face of the claim without having to go into lengthy and mature consideration in detail. If one has to go into lengthy and mature consideration in detail of the issues of law and/or fact, then the matter is not appropriate to be struck out summarily. It must be determined at trial. “As was laid down in Bandar Builder, the basic test for striking out is that the claim must on the face of it be obviously unsustainable. If one has to go into lengthy and mature consideration in detail of the issue of law and/or fact, then the matter is not appropriate to be struck out summarily. (See p 16 para 28)”. (b) “[58] The ‘obviously unsustainable’ test as adopted by in Bandar Builder, would ensure fair trial and access to the court to litigants. The respondents (the plaintiffs) should be given their day in court to prove their case. The court should not strike out an action purely or for the simple reason that it is ‘unsustainable’. The degree of ‘unsustainability’ must be higher, ie it must be ‘obviously unsustainable’ before the action can be struck out summarily. The court should not pull its shutter down and close its door to the 11 respondents, by striking out their action summarily. The tests as adopted in Bandar Builder must be applicable across the board, including action grounded on fraud, as in the case before us. The learned High Court Judge and the Court of Appeal were right in holding that the respondents’ action is not obviously unsustainable and dismissed the appellant’s application for striking out (See p 21 para 58)”. 35. As the applicant has raised two procedural objections to pleadings in support of Enclosure 27 application, the following provisions of the Rules of Court 2012 are relevant to be considered here: “ORDER 1A COURT OR JUDGE SHALL HAVE REGARD TO JUSTICE Regard shall be to justice (O. 1A) In administering these Rules, the Court or a Judge shall have regard to the overriding interest of justice and not only to the technical non- compliance with these Rules. ORDER 2 EFFECT OF NON-COMPLIANCE Non-compliance with Rules (O. 2, r. 1) 1. (1) Where, in beginning or purporting to begin any proceedings or at any stage in the course of or in connection with any proceedings, there has, by reason of anything done or left undone, been non- compliance with the requirement of these Rules, the non- compliance shall be treated as an irregularity and shall not nullify the proceedings, any step taken in the proceedings, or any document, judgment or order therein. 12 (2) These Rules are a procedural code and subject to the overriding objective of enabling the Court to deal with cases justly. The parties are required to assist the Court to achieve this overriding objective. (3) The Court or Judge may, on the ground that there has been such noncompliance as referred to in paragraph (1), and on such terms as to costs or otherwise as it or he thinks just, bearing in mind the overriding objective of these Rules, exercise its or his discretion under these Rules to allow such amendments, if any, to be made and to make such order, if any, dealing with the proceedings generally as it or he thinks fit in order to cure the irregularity. Preliminary objection for non-compliance of rules not allowed (O. 2, r. 3) 3. A Court or Judge shall not allow any preliminary objection by any party to any cause or matter or proceedings only on the ground of non-compliance of any provision of these Rules unless the Court or Judge is of the opinion that such non-compliance has occasioned a substantial miscarriage of justice or occasioned prejudice that cannot be cured either by amendment or an appropriate order for costs or both.” 36. As regards the complaint of CK Lim Plantation Sdn Bhd’s duplication in its filing of two replies as pleadings, this Court notes that under the rules of pleadings there is nothing to prohibit duplication in pleadings as such. In multi-partite proceedings under O. 15 with the addition of new party co-defendant in the counterclaim or under O. 16 on third party proceeding or further annex proceedings similar to third party proceedings, it is common practice that what a defendant has pleaded in the original action are pleaded again or repeated in a subsequent pleading in the third party proceeding, and what the 13 third party has pleaded in the third party proceeding are pleaded again or repeated in subsequent pleading in the fourth party proceeding. Even in cases involving a plaintiff and a defendant without any third party proceeding or any annex proceeding, it sometimes happen that the plaintiff in his Reply reiterates or even repeats certain parts of his Statement of Claim in reply to the defendant’s Statement of Defence, and it has never been the practice or precedent of the Courts that such repeated pleadings in the plaintiff’s Reply would be struck out under O.18 r.19. 37. In the considered view of this Court, what CK Lim Plantation Sdn Bhd did in our present case is not something which is so prejudicial or so seriously defective as to warrant a summarily striking out of the pleading in the present case. 38. This Court also notes that the contents of the impugned pleading here (the Reply dated 5.1.2021 of CK Lim Plantation Sdn Bhd and CK Lim) is materially similar to the relevant parts of the contents in CK Lim Plantation Sdn Bhd’s Reply and Defence to Counterclaim in the original action. There is no material departure from an earlier pleading nor any material contradiction between the two Replies. 39. In the circumstances, this Court finds that even if there was any non- compliance of any provision of these Rules in respect of the Reply dated 5.1.2021, such non-compliance has not occasioned any substantial miscarriage of justice, nor has it occasioned any prejudice that cannot be cured either by amendment or an appropriate order for costs or both. 14 40. Of course, it is understood that the “Reply” dated 5.1.2021 in reality serves as the Defence to Lim CL’s claims in the counterclaim action and forms part of the pleadings in the counterclaim action, while the earlier Reply dated 4.12.2020 serves as the Reply in the original action and forms part of the pleadings in the original action. There is no prejudice to Lim CL in dealing with the Replies, but it is CK Lim Plantation Sdn Bhd and CK Lim who bear the risks of being discredited at the full trial for any inconsistency between the two Replies. 41. As regards Lim CL’s allegation on lack of substantive merits in the Reply dated 3.2.2021, this Court does not find that the matters pleaded in the Reply dated 5.1.2021 can be said to be obviously unsustainable. It is the finding of this Court that the matters pleaded in the Reply dated 5.1.2021 ate triable issues which form part of the disputed facts in our present case involving a complex set of interwoven issues and disputes between family members involved in a family business. Moreover, the matters pleaded in the Reply dated 5.1.2021 are closely intertwined with the matters pleaded in Lim CL’s own pleadings in the present case. 42. In the circumstances, this Court agrees with the Sessions Court that this case is not suitable for summarily striking out the Reply dated 5.1.2021. CONCLUSION 43. By reason of the above, this Court affirmed the decision of the Sessions Court in respect of Enclosure 27 and has therefore 15 dismissed the appeal in Civil Appeal No. BA-12ANCC-44-06.2021. This Court also assessed the costs of appeal at RM5,000, subject to allocator, as payable by the Appellant to the Respondents. Dated : 25th November 2021. Signed ............................................................ TEE GEOK HOCK JUDICIAL COMMISIONER HIGH COURT OF MALAYA AT SHAH ALAM (NCVC 10) To the parties’ solicitors: 1. For the Appellant : Ooi Onn Kit Messrs Palani Aishah & Co 2. For the Respondents : Phua Lee Ling Messrs Lim Phua & Noraini 16