The applicant, by an ex parte originating summons, applied for and was granted, inter alia, an order granting it liberty to convene meetings for its creditors and shareholders to consider and approve a scheme of arrangement proposed to be made between the applicant and its creditors, and an order to restrain the plaintiffs from all actions or proceedings, including the appointment of receivers and managers. Three secured creditors, including the Bank of Commerce (M) Bhd ('BOC'), applied to set aside the orders obtained. BOC also applied to appoint certain persons as receivers and managers. A preliminary objection was raised against BOC's application on the ground that a committal order was ensuing against its president and vice-president for contempt of court. As the contempt had not been purged, BOC could not be heard. The court had dismissed this preliminary objection as that rule did not apply to an application to set aside an injunction granted ex parte if the object of such an application was to clear the very contempt complained of and to set aside the very order upon which the alleged contempt was founded. The court next proceeded to rule on the main application of the intervenors.

Held, allowing the application: (1) a proper reading of the proposed scheme clearly showed that the proposed scheme of arrangement was not viable, feasible, workable or intelligible; (2) even if the meeting was allowed to be held, with the three secured creditors, who formed more than the three-fourths statutory majority of the creditors, canvassing their objections, it would certainly result in the proposed scheme being rejected. It was more proper and logical, therefore, not to have the scheduled meeting at all.

Twenty First Century Oils Sdn Bhd v Bank of Commerce (M) Bhd & Ors (No 2) [1993] 2 MLJ 353 High Court, Kuala Lumpur (Abdul Malek J).

Sarawak Building Supplies Sdn Bhd v Director of Forests & Ors [1991] 1 MLJ 211 High Court, Kuching (Haidar J).

In winding-up proceedings, an ex parte injunction was granted to restrain the respondent company from raising any form of capital and/or loan stocks and/or altering its paid-up capital. The respondent applied to set aside the injunction, raising a preliminary objection that the petition should be heard by the Penang High Court. The respondent also objected to the injunction on the ground that it had the effect of prohibiting the holding of a meeting of a body corporate contrary to O 29 r 1(2c) of the Rules of the High Court 1980.

Held, dismissing the application: (1) by virtue of the definition of 'local jurisdiction' in s 3 of the Courts of Judicature Act 1964, the plaintiff was entitled to file an action in any branch of the High Court in Malaya. A branch of the High Court located in any state has concurrent jurisdiction to entertain any civil proceedings; (2) the injunction was to be construed by reference to the intention as expressed in the injunction itself. If the words contained in the injunction were precise and unambiguous, there was no room for any construction other than the one expounding those words in their ordinary and natural meaning; (3) upon proper construction, the injunction did not restrain the respondent from holding a meeting at all.

Goh Boon Kim v Taman Sungai Dua Development Sdn Bhd [1995] 4 MLJ 553; (1994) CSLR IX[1627] High Court, Kuala Lumpur (Low Hop Bing JC).

Tan Guan Eng v BH Low Holdings Sdn Bhd & Ors and other actions [1992] 1 MLJ 105 High Court, Penang (Wan Adnan J).

P1-P12 were shareholders of D1 company. D3 is D1's executive chairman. D2 company, a wholly-owned subsidiary of D1, was incorporated for the purpose of developing land belonging to D1. D2 entered into an agreement with Y Pte Ltd, a Singapore company, whereby Y Pte Ltd undertook to develop D1's land. The Foreign Investment Committee ('FIC') had no objection to D2's agreement with Y Pte Ltd subject to conditions, inter alia, that D1 obtained approval of its shareholders after 'detailed information of the proposed development had been circulated to the shareholders. Subsequently a notice with an 'Explanatory Circular' was issued to D1's shareholders, giving notice of an extraordinary general meeting (EGM) to ratify D2's agreement with Y Pte Ltd and to approve Y Pte Ltd's use of the land as security to raise funds for the proposed development. The notice was followed by a letter from D3 in his capacity as D1's executive chairman to each of D1's shareholders. D3's letter referred to the need for the shareholders to ratify the agreement. P applied, inter alia, for a declaration that the notice of the EGM and the circular were misleading and invalid.

Held, granting the declaration: (1) D1's EGM had to be called because of s 132C of the Companies Act 1965 and the condition imposed by the FIC. Under D1's articles of association, D1's shareholders should have been furnished with a notice of at least the general nature of the business to be transacted at the EGM but the FIC condition required the notice to condescend to 'detailed information'; (2) D3's letter was meant to deal with and dealt with the business to be transacted at the EGM. D3's letter had to be treated as part of the information given by D1 pursuant to its articles of association and pursuant to the condition imposed by the FIC; (3) the information given by the notice, the circular and the letter was most artfully framed to mislead D1's shareholders. TheÊ agreement was also most artfully framed to conceal its true nature which was far from being a joint venture. It was actually an outright sale of D1's land and was one-sided in favour of Y Pte Ltd.

Dato Mohd Tahir bin Abdul Rahim & Ors v Sharikat Permodalan Kebangsaan Bhd & Ors (1990) CSLR IX[1004] High Court, Kuala Lumpur (VC George J).

P applied for an injunction to restrain D1 and D2 from (a) convening, calling holding or conducting an extraordinary general meeting (EGM) of P for the purposes and objects set out in the notice of requisition issued by D1 and D2; and (b) removing or taking any steps to alter the composition of P's board of directors. The resolutions contained in the notice of requisition to be considered at the EGM were for the purpose of removing the five existing directors of P and to appoint in their stead D7-D12. D1 and D2 were the registered holders of ordinary shares in P representing more than 10% of the total rights of all members having a right to vote at general meetings of P. D1 and D2 were informed by P that the board of directors would not convene the EGM. In the letter, it was stated that the requisition lacked formal particulars and that the notice was illegal, null and void and of no effect and was not binding upon the board of directors. Subsequent to this letter, P had filed a writ against D and the present application for an injunction was filed subsequent to the writ.

Held, dismissing P's application: (1) in the instant case, the requisition and the special notice were not bad in law as alleged by P. As required by s 144(2) of the Companies Act 1965, the requisition had expressly and clearly stated that the meeting was for the purpose of considering the resolutions stated therein. The requisition and the special notice were signed by the authorized officers and served on P. Section 144(2) does not require the documents to bear the common seals of D1 and D2. The articles of association of P also did not contain such a requirement. The requisition and the special notice had, accordingly, complied with the requirements of s 144(2) and the articles of association of P; (2) in the instant case, D1 and D2 were registered members holding more than 10% of P's paid-up capital and, accordingly, they were entitled to issue the requisition and the special notice under s 144(1) of the Companies Act 1965; (3) P's allegation that the deposit of the requisition and the special notice was not a bona fide move to hold a meeting of P's shareholders but that it was an attempt to take over P in contravention of s 179 of the Companies Act 1965 was rejected by the court. The court found that there was no acquisition of shares by D in the instant case. Since D already owned 34.46% of the paid-up capital of P, the question of acquiring more shares for the purpose of taking over under s 179 did not arise at all. There was, accordingly, no reason for D to act in concert in view of the total number of shares registered in their names; (4) in the instant case, P should not be granted the injunction because that would mean giving P judgment in the case against D. D would have no opportunity to bring the case to trial as the requisition in the face of the injunction would have no effect with the result that there would be no EGM and no trial of the action. As D1 and D2 had complied with the provisions of the law and the articles of association, they should be given the liberty to proceed with the EGM of the shareholders. In the circumstances of the case, the tests laid down in [bi[American Cyanamid Co v Ethicon could not be applied as the risk of doing an injustice was greater if the injunction was granted.

Roxy Electric Industries (Malaysia) Bhd v Syarikat Nominee Bumiputra Sdn Bhd & Ors [1989] 3 MLJ 231 High Court, Kuala Lumpur (Zakaria Yatim J).

The plaintiffs had obtained loans from various foreign banks and, as security for the loans, had deposited, by themselves or by third parties, an aggregate of 41,133,875 shares with Landmarks, in the first defendant company. The plaintiffs were in default of the loan agreement and liabilities had arisen thereunder. The defendant banks had then caused the shares to be registered in their or their nominees' names and thereafter requisitioned for an extraordinary general meeting of the first defendant company to remove certain directors. The plaintiffs moved for and obtained, ex parte, an interim injunction restraining the holding of the meeting. The present hearing is for an application of extension of the injunction. Among the grounds advanced for the injunction were that the plaintiffs were then preparing for a scheme of reconstruction to which the defendant banks were privy, and that the defendant banks had attempted to obtain certain confidential information and, having failed, had then requisitioned the extraordinary general meeting which showed that there was an ulterior motive on their part in so requisitioning.

Held, dismissing the application with costs: (1) as the defendant banks commanded only 18% of the share capital of Landmarks, if the resolution proposed for the extraordinary general meeting was not in Landmarks' interest, there was every reasonable expectation that the defendant banks would fail in their attempt; (2) the damage that plaintiffs were complaining of was monetary and therefore, damages were not only an adequate remedy but the only remedy. As the defendants are able to satisfy any claim the plaintiffs can prove against them at trial, therefore the learned judge was not disposed to continue the ex parte injunction he had granted earlier; (3) in view of the fact that the grant of the relief sought would have disposed of the whole action, the court would apply the tests propounded in Cayne & Anor v Global National Resources [1984] 1 All ER 225 and NWL Ltd v Woods [1979] 3 All ER 614 and dismiss the application; (4) there was no evidence whatsoever with regard to the allegations that there was a 'fraud' on the defendants' statutory power to requisition an extraordinary general meeting. As the evidence did not show any fraud or oblique motive, the right to requisition was exercised bona fide. The pledgee is entitled to do everything he reasonably can to realize his security. As the pledgees here have a right to sell, the buyer would have acquired all the rights of a registered shareholder. The express right to call for the extraordinary general meeting and to vote thereat need not be looked for in the pledge documents. They are conferred by the Companies Act 1965 (Act 125) and the memorandum and articles of association of the company.

Canopee Investment Pte Ltd & Ors v Landmarks Holdings Bhd & Ors [1989] 2 MLJ 469 High Court, Kuala Lumpur (Shankar J).

The fourth defendant filed an application (the first application) requesting leave to join PT Kwala Gunung (the company) as a defendant to this action. The application was supported by an affidavit filed by A, a director of the company who was also the third defendant. Before the application could be heard, the first defendant and certain other individuals filed an application (the second application) praying, inter alia, that A be restrained from purporting to represent the company in a suit without the written consent and sanction of the company's shareholders obtained in accordance with the company's articles of association and from convening meetings of the company's board of directors. The main issue in this case was whether A was validly appointed the president director of the company at an EGM of the company of 11 January 1995, when G resigned as president director of the company in December 1994. As the vacancy had to be filled by calling an EGM within one month thereof, pursuant to art 10(5) of the company's articles of association, A (who held less than 25% of the issued shares in the company and which did not allow him to requisition for an EGM under art 14(3)) went ahead to call for an EGM on 11 January 1995 by inserting a notice in an Indonesian paper. At the EGM on 11 January 1995, A was the only shareholder who attended. He appointed himself as president director, his wife as director and his son and two others as commissioners. The first defendant contended that there were formal as well as material defects with regard to the EGM and the resolutions adopted thereat. A argued, inter alia, that a single shareholder could validly pass resolutions to appoint a new board of directors and new commissioners. Furthermore, since his appointment as a commissioner in 1979 continued to be valid even after it lapsed after a two-year term in 1981, as there was no appointment of a new commissioner by the general meeting of shareholders, A being the sole commissioner was required under the articles to convene an EGM to appoint a new board of directors. Both sides called expert evidence to support their positions.

Held, allowing the second application: (1) the court could not accept A's expert evidence that he remained as a commissioner of the company after the expiration of his two-year appointment in 1981 as art 10(3) clearly stated that the office of a commissioner was only to be for a period of two years; (2) as the court found that A was not a commissioner of the company since 1981, he could not have properly requisitioned the EGM of 11 January 1995 under art 14; (3) A was not validly appointed as the president director of the company at the EGM of 11 January 1995. As a consequence, he neither had the authority to represent the company in any legal proceeding in Singapore nor to instruct solicitors to file the first application seeking to join the company as a defendant to these proceedings.

Banque Indosuez v Madam Sumilan Awal, also known as Aw Kim Lan & Ors Originating Summons No 811 of 1994 —High Court, Singapore (Lai Siu Chiu J).

Since his appointment as a director of the defendant company, the plaintiff had requested the managing director, general manager and chairman of the board of directors respectively for information and access to the accounting records, tax files and other relevant records but had been refused. He alleged that he, together with some other shareholders of the company, discovered that there were certain irregularities in the management of the funds of the company by the board of directors. The plaintiff then applied to the court for an order that the defendant company be restrained from holding its annual general meeting until his previous application for an order that the accounting records and tax files of the company be opened for inspection by an approved company auditor is disposed of. The defendant company argued that it was not satisfied with the bona fide of the plaintiff's intention in seeking to examine the company's books. It claimed that the plaintiff's request was merely to assist him in his pursuit of alleged claims against the other directors of the company.

Held, allowing the plaintiff's application: (1) the plaintiff had an absolute right to inspect the account books of the company. This is clearly provided by s 167(3) of the Companies Act 1965. This right was denied to him. If the injunction is not granted, he will be unable to perform his duties and discharge his responsibilities as a director because his term of office as director will expire on the date of the annual general meeting; (2) the court considers the injunction essential in order to protect the interests of the company, namely, that the shareholders will know what is exactly the true financial position of the company. On the other hand, if the injunction is granted, the court can see no harm to the company because the injunction sought for is an interim injunction and the company can still hold its annual general meeting within the required statutory period.

Leong Sun Wing v Wah Hup Engineering Works Sdn Bhd (No 1) Originating Summons No C166 of 1984 High Court, Malaysia (Zakaria Yatim J).

P, a management corporation, sued D, a sub-proprietor of one of the units on the estate under P's control, in respect of unpaid contributions. P claimed that resolutions were passed at two general meetings duly levying on each sub-proprietor certain contributions. D challenged the validity of the meetings and the resolutions.

Held, allowing P's claim: (1) even if D's claim that the notice for the first meeting was less than seven days, this omission would not invalidate the meeting as it was an accidental omission and D had not suffered any prejudice as he had attended the meeting; (2) the resolution passed at the meeting, although by voice vote, was valid as the entry in the minutes of the meeting by the chairman was prima facie evidence of the passing of the resolution and the correctness thereof; (3) D's claim that the quorum at that meeting was not present was not accepted and even if his claim was true, the persons present would constitute a quorum after half an hour after the time appointed for the meeting; (4) the failure of P to convene an annual general meeting within a year of the prior meeting did not invalidate the later meeting. Even if the two meetings were invalid, D had waived the irregularities by failing to apply for an injunction to restrain P from proceeding with the meetings. Also, D had allowed himself to be elected as a council member; (5) in addition, once the resolutions are passed and acted upon and carried into effect many years after the meeting, the lack of quorum will not affect the validity of the resolutions. The resolutions were also ratified at a later meeting.

Bin Hee Heng v Management Corporation Strata Title No 647 (1988) CSLR IX[753] District Court, Singapore (Liew Thiam Leng, District Judge).

This was an appeal from the decision of the district court awarding judgment to the respondents/plaintiffs, the management corporation ('MC') of a condominium which comprises a walk-up apartment block (Skyvilla) and two high-rise blocks (Skyscraper). The appellant, Bin Hee Heng ('BHH'), was the subsidiary proprietor of a flat in Skyvilla and was sued by the MC for arrears in contribution to the maintenance fund together with interest thereon, both of which were levied in accordance with resolutions passed at an extraordinary general meeting of members of the MC held on 3 March 1984 ('the EOGM'), and confirmed at the adjourned second annual general meeting ('the second AGM') held on 3 February 1985. The dispute arose from the EOGM called by the MC to pass, among others, a resolution to levy contribution to the maintenance fund on the basis of the share value for each subsidiary lot. This would have the effect of raising and bringing the contribution due from the subsidiary proprietors of Skyvilla units to the same level as that for Skyscraper owners although the Skyscraper units were larger in area, and the maintenance and repair costs for the Skyscraper blocks with lifts would be higher. The notice in respect of the EOGM was served about three days before the meeting when the minimum period stipulated was seven days. BHH nonetheless attended the EGOM and took an active role in objecting to the 'raise' in the then existing contribution. As a result of the objection, it was resolved that the matter on contribution was to be suspended for three months and the issue as to whether contribution should be determined solely by the share value of the subsidiary proprietor or by any other method, referred to the High Court. It was also minuted that if the referral to the High Court was not finalized within three months, contribution to maintenance fund shall be at the rate proposed by the MC and if the High Court finally decided that the contribution from subsidiary proprietors of Skyvilla should be lower than that from subsidiary proprietors of Skyscraper, the excess in contribution paid by subsidiary proprietors of Skyvilla, shall be treated as a loan to the MC. After the High Court's confirmation that the only method for levying contribution under the Land Titles (Strata) Act ('the Act') was to be in accordance with the share value of the subsidiary proprietor, the minutes of the EOGM regarding the contribution to be levied was put up for consideration at the second AGM of the MC on 27 January 1985. This meeting was adjourned to the following week, 3 February 1985, when the minutes of the EOGM was confirmed by a poll, and it was also resolved that maintenance contribution towards the management fund shall be $74 per share unit per month, payable quarterly in advance. As BHH refused to pay, the MC sued him for the contributions amounting to the total sum of $5,093.94. BHH in return counterclaimed for the costs incurred in replacement of awnings to his flat and the clearing of blockage to some pipes. The district court awarded judgment to the MC on the whole sum sued for while allowing BHH only a part of his counterclaim. BHH submitted 68 grounds of appeal which can be broadly summarized as follows: (1) the EOGM was invalid because there was a failure to give the necessary seven days' notice, there was no quorum, some subsidiary proprietors were improperly disqualified from voting; (2) as the EOGM was invalid, all the resolutions were null and void and could not be ratified; (3) the adjourned second AGM was invalid as it was not called within 15 months of the first annual general meeting; (4) all the defects could not be waived by BHH.

Held, dismissing the appeal with costs: (1) the EOGM was valid for although the required seven days' notice had not been given, this was an accidental omission which did not prejudice anyone; (2) there was a valid quorum. The term 'persons entitled to vote' included proxies. This must necessarily be so as otherwise the legislature could use the term 'proprietors entitled to vote' and furthermore, companies who are subsidiary proprietors must vote by proxies; (3) the word 'contribution' includes contributions whether pursuant to a resolution of the MC or otherwise, and thus included the sums payable to the developer as maintenance contribution, prior to the setting-up of the MC. Thus, as the said sums had not been paid by BHH at the date of the EOGM, he was properly disqualified from voting at the EOGM; (4) voting by 'show of hands' is not restricted to its literal meaning of raising of hands but, in fact, bears a wider meaning of a show or demonstration by the meeting that it is in support of a resolution, so as to contrast with the more exacting procedure of a vote by poll. While the recording in the minutes of a formal declaration by the chairman that a resolution had been carried by a show of hands would be preferred, the failure to do so did not per se make a resolution invalid. In the circumstances, the recording in the minutes that the proposal was approved was sufficient evidence of a valid resolution; (5) if there was any doubt as to the validity of the resolution at the EOGM, the resolution at the second AGM approving the minutes of the EOGM was effective to carry into effect the resolution regarding the contribution. As BHH had not paid the contribution, he was properly disqualified from voting at the second AGM; (6) the fact that the resolution fixing the rate of interest in respect of late payment of contribution at 10% had incorrectly described the rate as 'the statutory rate' was immaterial. Any damage resulting from subsidiary proprietors being misled was minimal. The rate of 10% was within the powers of the MC to fix; (7) the validity of the adjourned second AGM was not affected by the fact that it was not called within 15 months of the last annual general meeting. To hold otherwise would mean that no valid meeting could be held once the 15-month period had lapsed. The only effect of such non-compliance with the law is that the corporation and its officers laid themselves open to prosecution.

Bin Hee Heng v Management Corporation Strata Title No 647 [1991] SLR 661 High Court, Singapore (Yong Pung How CJ).

The respondent, a private limited company, was incorporated to establish and run a medical specialist centre ('the centre'). The appellant, a doctor, was a director and a shareholder of the respondent. The respondent had eight directors and all of them were the only shareholders. The eight shareholders were medically qualified doctors and were specialists in their respective fields, each holding at least a block of the total shares of the respondent. The appellant was the only director and shareholder holding two blocks of shares. Each director cum shareholder entered into an agreement with the respondent for a licence to use a lot in the centre for the purpose of running his own clinic and was required to make monthly payments to the respondent for the licence. This arrangement, however, resulted in the respondent running the medical centre at a loss. The Board of Directors ('the Board'), at the suggestion of the appellant, in a meeting ('the first meeting'), decided that all shareholders are to pay a monthly surcharge ('the surcharge') to the respondent until further notice. At a subsequent meeting of the Board ('the second meeting'), the appellant requested for a review of his surcharge payments since he had been asked to pay twice the amount of surcharge as he was holding two blocks of shares but it was turned down by the Board. At another meeting ('the third meeting'), the appellant suggested that the surcharge payments be classified as capital investments. The appellant subsequently withdrew his practice from the centre. The appellant claimed the return of the total amount of surcharge payments he had paid to the respondent. The appellant claimed that the sum was loans to the respondent, free of interest, from time to time at the respondent's request and that such sum was to be returned on demand. The respondent denied that the surcharge payments were loans and claimed that they were subsidies to meet the costs of running the centre and were charges imposed for the use of its facilities by the appellant. The respondent also made a counterclaim against the appellant for surcharge outstanding and due from the appellant. The sessions court judge dismissed the appellant's claim as he found that there was no resolution to show that the surcharge payments were meant to be loans from the shareholders to the respondent and that the surcharge payments received by the respondent were not reflected as loans by the auditor in the accounts of the respondent. The sessions court judge also dismissed the counterclaim on the ground that the respondent was not entitled to claim as it was not a party to the agreement. Both parties appealed. The issue was whether the surcharge payments were meant to be loans from the shareholders to the respondent and thus recoverable, or meant to be non-recoverable contributions from the shareholders for maintenance of the centre and whether the decision of the Board that the shareholders pay a surcharge can be binding on the shareholders. At the appeal, the appellant argued that since the surcharge payments were collected from the appellant to pay the maintenance expenses for the running of the centre, the appellant, as director, was entitled to be indemnified by virtue of art 140 of the Articles of Association of the respon-dent. The respondent argued that the surcharge payments were never meant to be loans but were treated as income of the respondent.

Held, allowing the appeal, dismissing the counterclaim: (1) the sessions court judge had based his decision on irrelevant principles of law which are not applicable in this case; (2) the resolution to impose a surcharge on the shareholders, made at the first meeting of the Board, cannot at all be deemed to be a resolution of the respondent company at a general meeting, although the directors and shareholders are the same set of persons, since under the Companies Act 1965 ('the Act') certain statutory formalities must be complied with before a company can hold a general meeting. Furthermore the respondent company had only formalized the imposition of a surcharge when they ratified it at a general meeting of the company when they approved an amendment to the Articles of Association. The resolution of the meeting of the Board that all shareholders have to pay a surcharge cannot at all bind the shareholders. It has no legal effect and cannot be enforced against the shareholders even though they were the same set of persons; (3) a resolution that every shareholder has to pay a surcharge cannot be valid pursuant to the provisions of the Act where the conception of a company is that it was a person separate and distinct from the other persons who are its members and directors; (4) the liability of a member of a company limited by shares to contribute to the company's assets is limited to the amount, if any, unpaid on his shares. This means that the company's debts are the obligations of the company alone and cannot be enforced against the members, however many shares they may own. It is obvious that the directors had contravened the provisions of the Act when they resolved that the shareholders pay a surcharge to the respondent; (5) art 47 of the articles of association allowed the directors to borrow any sums of money for the purpose of the company. This means that the directors can resort to raising money for the company's purpose but they definitely cannot go about it by imposing a surcharge on the shareholders according to the amount of shares owned by them; (6) the surcharge received were utilised to pay the salaries of the staff, for payments toward the leasing of equipment and other facilities. These were definitely obligations of the respondent and the directors cannot enforce it against the shareholders; (7) thus the respondent is under a legal obligation to return to the shareholders the sums of money received as surcharge. The surcharge payments are tantamount to loans given to the respondent and these sums are now debts of the respondent which are repayable on demand; (8) the surcharge imposed was contrary to the concept of a company limited by shares;the imposition of a surcharge is ultra vires since it has resulted in making the shareholders personally liable for the debts of the respondent company, over and above what they had fully paid for their shares. The admission of estoppel would nullify the statutory provisions as to what constitutes a company limited by shares and allow the respondent company to do an ultra vires act.

Tan Tien Kok v Medical Specialist Centre (JB) Sdn Bhd [1994] 3 MLJ 469; CSLR IX[757] High Court, Johor Bahru (Mohd Ghazali JC).

First Nominee (Pte) Ltd v New Kok Ann Realty Sdn Bhd & Anor [1983] 2 MLJ 76 High Court, Singapore (Yusoff Mohamed J).

The company, a private limited company having its registered office in Kuala Lumpur and a branch office in Penang, had three directors. The petitioner was a director in Kuala Lumpur. The other two were directors in the branch office. The petition for winding up was filed on 16 October 1969. The two Penang directors held a directors' meeting at the Penang office on 4 December 1969 and appointed Mr MJ Mathew solicitor for the company. A preliminary objection was raised to Mr Mathew appearing on behalf of the company at the hearing of the petition on two grounds: (1) the directors' meeting was not valid as it was held outside Selangor, the state where the registered office is situated. In support of this the petitioner relied on s 145A of the Companies Act (1965 (Act 125); (2) the minutes of the meeting were not entered in the company's minute book which was kept by the company at its registered office.

Held: (1) the words 'any meeting' in s 145A do not apply to a meeting of the directors of a company but only to general meetings; (2) as the minutes of the directors' meeting had not been entered into the company's minute book within 14 days of the meeting, there was a contravention of s 156, and therefore the appointment of Mr Mathew could not be deemed valid.

Re LY Swee Co Sdn Bhd [1970] 2 MLJ 107 High Court, Kuala Lumpur (Abdul Hamid J).

The first defendant ('the company') was the registered proprietor of six lots of land ('the land'). The second to the ninth defendants were members of the first plaintiff's family, the second defendant being his first wife and also the secretary of the company, while the third and fourth defendants were their two sons. The second plaintiff was his second wife and a director and shareholder of the company. The second plaintiff held shares in the company on trust in favour of the third and fourth defendants, having executed two deeds of irrevocable power of attorney and two declarations of trust in their favour. On 17 April 1990, at a meeting of the company's board ('the meeting'), the second and third defendants, who were the only two directors present, purported to approve transfers by the third and fourth defendants to the ninth defendant of all the second plaintiff's shares, and to declare that the second plaintiff had ceased to be a director. At a subsequent board meeting, the first plaintiff was removed as the managing director. On 26 May 1990, the reconstituted board met and resolved that the land be sold to Pekan Nenas Industries Sdn Bhd ('the intervener'). The first plaintiff, however, entered a private caveat against the land on 6 September 1990 ('the first caveat'). On 26 October 1990, the second defendant gave an option to Tan, the chairman of the intervener, to purchase the land for RM4.8m. Tan paid RM100,000 in cash to the second defendant in consideration without receiving a receipt, upon which he was given possession of the land. On 3 December 1990, a sale and purchase agreement ('the agreement') between the company and the intervener was executed. The balance of the purchase price was to be paid by 1 March 1991. On 29 December 1990, however, the first plaintiff entered another caveat ('the second caveat') against the land, alleging that it was to protect his interests as a director of the company over the land. On 25 February 1991, despite knowledge of the caveats, the intervener's solicitors forwarded the balance purchase price to the company's solicitors but it was subsequently returned. In March 1991, Tan paid the balance of the purchase price in equivalent Singapore currency to the second defendant and was given the company's receipt. On 25 May 1991, the plaintiffs issued a writ challenging the propriety of the meeting and the validity of the sale of the land. The High Court nullified the meeting and set aside the sale. [See [1995] 2 MLJ 43.] The defendants appealed to the Court of Appeal ('the first appeal'). The intervener also filed a separate appeal against the plaintiffs and the defendants ('the second appeal'). In the first appeal, counsel submitted that: (a) the judge was wrong in holding that the notice convening the meeting was invalid and that even if were valid, it had not been served on the first, second and third plaintiffs; (b) even if no proper notice was served, the meeting and all business conducted was valid as the plaintiffs' attendance would have made no difference; (c) the judge was wrong in holding that the transfer of shares was invalid as it was done in the legitimate exercise of the powers of attorney and deeds of trust; and (d) even if the meeting and proceedings were defective, they could be cured under s 355(3)(a) of the Companies Act 1965 ('the CA'). In the second appeal, counsel argued that: (a) the intervener was entitled to rely on the rule in Royal British Bank v Turquand [1843Ð60] All ER Rep 435 in that it did not have to inquire into the internal affairs of the company; (b) the agreement was a normal transaction which would not have drawn the suspicions of a reasonable man; and (c) the intervener was a bona fide purchaser with no notice of any adverse claim to the land.

Held, dismissing both appeals (per Gopal Sri Ram JCA): (1) the determination of ground (a) in the first appeal was a pure question of fact turning upon the credibility of witnesses whom the trial judge had the advantage of visual assessment. The Court of Appeal could not detect any error of reasoning on the part of the judge and was satisfied that the judge had properly appreciated the evidence presented; (2) it could not be said that the attendance of the plaintiffs at the meeting would have made no difference. Prior to that meeting, the first, second and third plaintiffs formed the majority on the board. Thus their votes would have prevailed over those of the second and third defendants and their presence would have made a material difference; (3) unless the articles of a company provide to the contrary, a meeting of a board of directors is not valid unless reasonable notice of it and the relevant agenda that is to be discussed is given to the directors. In this case, no notice of the meeting was given. It was thus a nullity and all the business conducted was utterly void. It could not be considered a mere irregularity which could be cured because at the date of the meeting, the plaintiffs not only had a majority of voting power on the board but also on the floor of any general meeting that might have been convened; (4) as the business conducted at the subsequent meetings of the company's board were dependent for their validity upon the propriety of the meeting which had failed to stand up to curial scrutiny, those later meetings were also void; (5) the defendants alleged that the second plaintiff was given shares in trust for the third and fourth defendants because the company needed two Malaysian directors. The defendants' intention was that the Registrar of Companies should be misled into believing that the second plaintiff was the true beneficial owner of the shares and a director of the company. Thus the deeds of trust and powers of attorney were to perpetrate a fraud upon the administration and were plainly tainted with illegality, void and worthless and ground (c) in the first appeal failed; (6) s 355(3)(a) of the CA looks to the justice of a particular case and not at whether prejudice will result from the making of a validation order. The section vests the original discretion in the High Court and the initial function of the Court of Appeal is one of review only. Having regard to the findings of fact which the judge made and the way in which he approached the determination of where the justice of the case lay, the defendants had failed to show that the judge had committed an error which permitted the Court of Appeal to exercise a discretion of its own; (7) the second appeal by the intervener turned upon the state of Tan's mind at the relevant time which was a question of fact to be determined from the totality of the circumstances of the case; (8) whether the rule in Turquand applies depends upon the particular facts of the case. It is neither possible nor desirable to attempt to state what the paramount criteria are which a court should have in mind when deciding whether an outsider ought to have been put on inquiry; (9) the rule in Turquand when applied to a contract for the purchase of land under the Malaysian Torrens system has to work hand in hand with the doctrine of the bona fide purchaser. One is not a bona fide purchaser until one has paid all one's money under a contract of sale. It is also well settled that the knowledge of a solicitor is regarded by law as the knowledge of the client except where the solicitor acts fraudulently; (10) the caveats served to give notice to the world at large of the first plaintiff's adverse claim to the land. Though the second caveat was lodged after the agreement had been entered into, at the time of its entry the intervener was not a bona fide purchaser as it had yet to pay the full purchase price. The subsequent removal of the caveats did not result in the intervener becoming a bona fide purchaser because its mind had become infected with knowledge of the adverse claim before full payment was made; (11) on the totality of the evidence, including the existence of the caveats, the cash payment for the option without a receipt being given, the giving of physical possession of the land even before the execution of the agreement, the execution of the agreement before the incorporation of the intervener and the payment in cash of the balance purchase price directly to the second defendant, it could not be said that the trial judge had arrived at an incorrect conclusion. The intervener was faced with a set of facts that must have aroused the deepest suspicions in the mind of a reasonable man but chose to proceed notwithstanding the loud and clear warning that they sounded. It could not now say that it was a purchaser for value who acted in good faith; (12) (per curiam) there are strong policy reasons warranting the conferment upon the director of a limited company of a caveatable interest in his company's immovable property for the limited purpose of protecting that property from being dealt with contrary to law; (13) a charge of conspiracy to defraud is a serious one. It ought not to be countenanced by a court unless properly taken in a party's pleadings supported by full particulars and evidence is led in proof of the pleaded case; (14) the standard of proof where a conspiracy to defraud is alleged is the same as where fraud is alleged and must be proved beyond a reasonable doubt; (15) it is essential that a party's case be expressly put to his opponent's material witnesses when they are under cross-examination. A failure in this respect may be treated as an abandonment of the pleaded case and if a party, without valid reasons, refrains from doing so, then he may be barred from raising it in argument; (16) we should free ourselves of the shackles of English law and develop our own notion of what is meant by a purchaser by drawing on the analogy of decisions under the Specific Relief Act 1950, all of which are unanimous in holding that a man is not to be regarded as a purchaser unless he has paid all his money under the contract of sale.

Aik Ming (M) Sdn Bhd & Ors v Chang Ching Chuen & Ors and another appeal [1995] 2 MLJ 770; (1995) CSLR IX[759] Court of Appeal, Kuala Lumpur (Gopal Sri Ram, VC George and Abu Mansor JJCA).

Some dissatisfied members of a company registered under the Companies Ordinance served a requisition on the directors under s 115 of the ordinance to call a general meeting. The draft resolutions to be discussed at the meeting were sent with the requisition. The directors having failed to call a meeting in due time, the requisitionists under the provisions of s 115(3) of the ordinance proceeded to convene a meeting themselves. In the notices that were sent out by the requisitionists for their meeting, the date, time, place of the meeting were specified and additionally it has stated 'the business before the meeting will be to discuss and vote upon the resolutions set out in the notice of requisition'. No copy of the notice of requisition accompanied the notices calling a meeting. In an action by the company for a declaration that the resolutions passed at the subsequent meeting convened by the requisitionists were invalid and of no effect.

Held: the notices calling the meeting failed to comply with art 61 of the company, in that these notices did not specify the general nature of the business to be transacted at the meeting. This was a fatal flaw to the validity of the meeting and the proceedings of the meeting must be held void and of no effect.

Hup Seng Co Ltd v Chin Yin & Ors [1962] MLJ 371 High Court, Federation of Malaya (Suffian J).

David Lau Tai Bek v Lau Ek Ching Sdn Bhd [1972] 1 MLJ 217 High Court, Ipoh (Sharma J).

Solaiappan & Ors v Lim Yoke Fan & Ors [1968] 2 MLJ 21 Federal Court, Kuala Lumpur (Azmi CJ (Malaya).

The first and third plaintiffs, who were directors in Dr Leela Ratos & Rakan-Rakan (Chow Kit) Sdn Bhd ('the company'), filed two applications for, inter alia: (i) declarations that the 19th board of directors' meeting ('the meeting') held on 25 April 1994 was null and void because insufficient notice had been given, ie the notice was received only on 20 April 1994; and (ii) injunctions restraining the defendants from acting on the resolutions passed at the meeting. The agenda contained in the notice listed one of the items to be discussed as being the allegations of misconduct against the first plaintiff and his removal as managing director, but did not contain particulars of the allegations. The notice was left with the first plaintiff's clerk at his clinic. The plaintiffs collectively owned 80% of the paid-up capital of the company. The defendants were the other directors of the company and the company secretary. At the meeting, the first plaintiff was removed as managing director and 240,000 new shares were allotted, which effectively transferred control of the company from the plaintiffs to the defendants. The plaintiffs contended that the allotment was contrary to art 14 of the memorandum and articles of the company and asked the court to declare the allotment of shares null and void. However, the originating summons did not contain any prayer to that effect and the question was whether the court had the power to make an order declaring the allotment of shares null and void.

Held, dismissing the applications in part and making a declaration that the allotment was null and void: (1) where the memorandum and articles specify the duration of the notice of directors' meetings, the rule must be strictly complied with. However, where, as in this case, the memorandum and articles are silent on the issue, the court has to examine the previous practice in calling directors' meetings. In this case, five days was sufficient notice for the meeting; (2) an agenda of the business to be transacted at the meeting was not required in law to be given. The plaintiffs had no reason to complain since the particulars of the allegations did not have to be provided in the notice. The notice was valid in law and had been duly served. All proceedings and minutes of the meeting were also valid; (3) the court can grant a declaration irrespective of whether the applicant has a cause of action and even if the cause of action does not exist at the time of filing the application. The court's jurisdiction is unlimited subject only to its own discretion; (4) the court therefore granted a declaration that the allotment of shares was null and void as it was made with improper motive and not in good faith. It was ultra vires art 14 of the articles and contrary to common law principles.

Dr Mahesan & Ors v Ponnusamy & Ors [1994] 3 MLJ 312; CSLR IX[1007] High Court, Kuala Lumpur (Zakaria Yatim J).

Welch & Anor v Britannia Industries Pte Ltd [1993] 1 SLR 673 High Court, Singapore (Kan Ting Chiu JC).

This appeal concerns a condominium development, known as 'Teresa Ville', where the strata title plan had been duly registered under the Land Titles (Strata) Act (Cap 158) ('the Act') and, in consequence, the management corporation, the appellants, was formed on 3 October 1985. All subsidiary certificates of title had been issued on the same day. But on 26 October 1985, temporary occupation licences were only issued for the flats and lots in blocks 1001 to 1003. Thereafter the subsidiary proprietors of those flats and lots took possession and enjoyed the amenities of a part of the common property. So far as the flats and lots in blocks 1005 and 1007 were concerned, the temporary occupation licences for them were issued only on 15 September 1986. Between 3 October 1985 and 15 September 1986, blocks 1005 and 1007 together with such part of the common property appertaining thereto were physically demarcated from blocks 1001 to 1003. During that time, the respondents as the subsidiary proprietors of the flats and lots in blocks 1005 and 1007 had been maintaining them for their own account. On 3 May 1986, the appellants held an adjourned extraordinary general meeting and resolved at that meeting to fix the maintenance contributions at $55 per share value with retrospective effect from date of TOL. The appellants took the view that the resolution meant that the respondents as the subsidiary proprietors of the lots in blocks 1005 and 1007 were liable to pay the maintenance contributions together with accrued interest from 26 October 1985, the date of issue of TOL for block 1003. The respondents refused to pay the maintenance charges, claiming that they have been maintaining the blocks on their account. The appellants applied to the High Court seeking, inter alia, a declaration on that the respondents were liable to pay. The application was dismissed by the High Court, the judge finding that the general meeting of 3 May 1986 was a nullity because no notice of the general meeting had been given to the respondents. The appellants appealed. They alleged that as the respondents had attended and voted at the general meeting they were therefore precluded from later challenging its validity.

Held, dismissing the appeal: (1) there was sufficient evidence to find as a fact that no notice of the general meeting of 3 May 1986 was given to the respondents as subsidiary proprietors of the flats in blocks 1005 and 1007. Failure to give notice of a meeting convened for an important matter such as the levy of maintenance charges would invalidate the general meeting; (2) the respondents attended and voted at the general meeting in their capacity as subsidiary proprietors of two flats in block 1003. That fact was clearly recorded in the minutes. In their capacities as subsidiary proprietors of the flats in blocks 1005 and 1007 they are therefore not precluded from challenging the validity of the general meeting.

Management Corporation Strata Title No 980 v Yat Yuen Hong Co Pte Ltd & Anor [1993] 1 SLR 555 Court of Appeal, Singapore (Yong Pung How CJ, Lai Kew Chai and LP Thean JJ).

The plaintiffs hold 25.77% of all the shares in respect of the subdivided building in Orchard Road called Wisma Atria. The first defendants were the developers of the building and are the subsidiary proprietors of the remaining lots amounting to 74.23% of the share values. The second defendants are the management corporation of the subdivided building. By this application the plaintiffs seek to declare a certain meeting of the management corporation null and void. This in turn raised two questions of law: (i) could a general meeting of the management corporation be validly convened with only one subsidiary proprietor holding more than 50% of the share values being present; and (ii) whether, in the circumstances of the case, a proper notice was given for the convening of the meeting. The plaintiffs submitted that there was no proper notice for two reasons. First, the letter of 12 October 1991 which gave notice of the meeting only says 'In order not to delay matters, we suggest that a meeting be fixed on 24 October 1991 ...'. Second, there was no 14-day notice of meeting as required by para 1(1) of the Third Schedule to the Land Titles (Strata) Act (Cap 158).

Held, granting the order that the meeting held on 24 October was null and void: (1) there is nothing is the Land Titles (Strata) Act which necessarily suggests that the said expression 'subsidiary proprietors' must only mean the plural and does not include the singular. The Act clearly contemplates that a management corporation could very well comprise only one subsidiary proprietor, where that proprietor holds all the share values of the strata title plan; (2) for the purposes of determining the quorum under para 3(2) of the Third Schedule to the Act, the only relevant criterion is the percentage of the share values, not the number of physical persons present. If a single individual should hold 50% of the share values of all the lots shown on the strata title plan, he alone suffices to constitute a quorum; (3) the second part of para 3(2) only comes into operation where there is no quorum (ie where the criterion of 50% of share values is not satisfied), in which event what is needed is at least two subsidiary proprietors in person, irrespective of the share values which those two proprietors may hold, to carry on the meeting; (4) the prior issue of a proper notice of meeting to all members entitled to receive it is essential for a meeting to be validly constituted; (6) the letter of 12 October 1991 was not a proper notice of the meeting of 24 October 1991 as it was only a suggestion made by the first defendants. A contingent notice is not a sufficient notice; (5) there is authority for the proposition that where the rules or regulations of a body provide for a stated period of notice to be given, that requirement must be complied with, otherwise the meeting will be invalid. It would be different if members, by word or conduct, expressly or impliedly consented to a shorter notice; (6) it is clear that even if the notice given in the letter of 12 October 1991 was not defective as discussed above, it was not served on the plaintiffs 'at least 14 days before the meeting'.

Isetan (Singapore) Ltd v Wisma Development Pte Ltd & Anor [1992] 2 SLR 616 High Court, Singapore (Chao Hick Tin J).

The estate in question was a housing estate originally built by the HUDC in which P ran a supermarket as a tenant of the HDB. Under the terms of the tenancy, P agreed to use the premises as a supermarket and for no other purpose. D1 was the management corporation of the estate. The second to thirteen defendants were the current members of the management committee of D1. On 19 April 1987, D1 held a extraordinary general meeting at which the members passed a resolution to introduce a pay parking scheme ('the scheme') within the estate. The scheme sought to regulate vehicular traffic flow to prevent unauthorized parking and to reduce surface wear and tear of the roads. The scheme required all non-resident motorists to pay S$1 if they wished to enter or park in the estate. Following the passing of the resolution, P became concerned about the effect of the scheme on its business. Proposals were made by P to D1, which involved P helping to regulate traffic flow in return for the scrapping of the scheme, and these were accepted. An agreement embodying the proposals ('the agreement') was then entered into between D1 and P. However, on 28 October 1988, D1 held an extraordinary meeting to implement the scheme immediately. The chairman of the meeting ruled that the resolution to implement the scheme was a special one. A vote was taken but as more than 10% of the members voted against the resolution, it was declared lost. Following the expiry of the agreement, the management committee put the scheme into immediate effect. P started the action against the defendants for a declaration that D1 was acting outside its powers in imposing the scheme, or that the scheme amounted to a private nuisance, or that it was an unlawful interference with P's trade and that D1's action caused the HDB to breach its tenancy agreement with P. P sought an injunction to restrain the defendants from interfering with any person entering the estate, and an order for the defendants to pay damages caused by the imposition of the scheme.

Held, dismissing P's claims: (1) the grantor of land to be used for a particular purpose is under an obligation to abstain from doing anything on the adjoining property belonging to him which would prevent the land granted from being used for the purpose for which the grant was made. This principle is applicable even where there is no physical interference with the enjoyment of the demised land, but the interference must be substantial; (2) the crux of the matter was whether the operation of the scheme amounted to a substantial interference with the rights of P. Under the scheme, P's customers were not barred or prevented or hindered from shopping at P's supermarket. The scheme was undoubtedly reasonable and the levy was also reasonable; (3) P's claim was not sustainable. It was much too extensive a right to be implied by law in favour of P for the purpose of operating their supermarket as it is neither reasonable nor necessary for such a business. If the court were to imply such a right, it would in effect be rewriting the terms of the tenancy agreement in favour of P; (4) all that the scheme would do would be to make it more expensive or less profitable for P to operate the supermarket, but case law had decided that that does not amount to a derogation from a grant; (5) D1 not only had the power to manage the estate, it was under a duty to do so. The regulation of the use of the roads and the car parks in the estate came within D1's power of management. Moreover, the adoption of the scheme was effected by a general meeting of the lessees of the flats in the estate, who were owners as tenants in common of the roads; (6) P's interim injunction was thus set aside and the action was dismissed with costs; (7) the special resolution passed on 28 October 1988 did not passed as such because the required 14-day notice to the members had not been given. However as an ordinary resolution, it was validly passed, on the basis of the voting.

Cold Storage Singapore (1983) Pte Ltd v Management Corporation of Chancery Court & Ors [1989] SLR 804 High Court, Singapore (Chan Sek Keong J).

The applicant sought for an order that the register of members of the first respondent (the company) be rectified by striking out the name of the second respondent therefrom as the holder of the 1,000 shares of the company and that notice of such rectification be given to the Registrar of Companies. The company was incorporated on 1 December 1971 with an authorized capital of S$3,000,000 in 30,000 shares of S$100 each. On 30 December 1978, 25,000 shares were issued. The applicant held 12,859 shares, the majority shares, and the second respondent held 12,139 shares. On 6 February 1979, the company convened a general meeting and passed a resolution to increase the capital of the company by another S$100,000 in 1,000 shares of S$100 each. The new shares were to rank pari passu with the existing ones to be issued at par to the existing shareholders in proportion to its shareholdings as at 6 February 1979. Based on that resolution, the applicant was purported to have been allotted with 510 new shares and the second respondent with the remaining 490 shares. The applicant purportedly having failed to subscribe for the new shares, they were forfeited by the company and subsequently reallocated to the second respondent who, as a result, became the majority shareholder of the company. The notice of the meeting was sent out but returned undelivered to the applicant. The notice was sent 11 days before the meeting was held and therefore, three days short of the length of service required by the memorandum and articles of association of the company. The said notice was defective for being insufficient notice, and accordingly the meeting was ineffective and the resolution passed thereat was invalid unless it was saved by a validation order under s 355 of the Companies Act 1965 (Act 125) (the Act). The applicant averred that it was not given the notice of meeting and accordingly it was not represented at the said meeting. It alleged irregularities and in particular that the issue of 1,000 new shares to the second respondent was improper and unlawful, designed to gain majority control over the affairs of the company by the second respondent.

Held, allowing the application: (1) the criteria in exercising discretion is for the court to satisfy itself that any such order would not do injustice to the company or to any member or creditor thereof Ð s 355(3)(b) of the Act; (2) prejudice is not the criterion, justice is, and that justice may require that the prejudice to one party if the order were made be balanced against the respective prejudice to other parties if the order were not made; (3) in this case, the absence of a proper notice to the applicant both in regard to the general meeting as well as the forfeiture of the purported new shares allotted to it, had substantially prejudiced its position in the company as a majority shareholder. This had caused injustice to the applicant. On the balance of respective prejudice, a validating order should therefore not be made.

First Nominee (Pte) Ltd v New Kok Ann Realty Sdn Bhd & Anor [1983] 2 MLJ 76 High Court, Singapore (Yusoff Mohamed J).

David Lau Tai Bek v Lau Ek Ching Sdn Bhd [1972] 1 MLJ 217 High Court, Ipoh (Sharma J).

Byng v London Life Association Ltd & Anor [1989] 1 All ER 560 Court of Appeal, England (Sir Nicolas Browne-Wilkinson VC, Mustill and Woolf LJJ).

A were subsidiary proprietors of 4 out of 81 lots in a building, of which R was the management corporation. U held 51 lots. The remaining lots were held by 16 other subsidiary proprietors. At the AGM of the management corporation a resolution was passed to increase the monthly contributions. Only representatives of eight subsidiary proprietors were present, including a representative of U. R sued A for the increased contributions. A challenged the validity of the resolution on the ground that there was no quorum at the AGM (the Land Titles (Strata) Act provided that one half of the persons entitled to vote should be a quorum). The district court gave judgment for R. A appealed.

Held, dismissing the appeal: (1) where alternative constructions of a statute are equally open, the court should choose the one which will be consistent with the smooth working of the system; (2) 'one-half of the persons entitled to vote' meant persons representing one-half of the lots. Accordingly, there was a quorum at the AGM; (3) where a management corporation is obliged to sue to recover contributions, s 37(8) of the Land Titles (Strata) Act entitles it to recover costs on a solicitor and client basis.

Lee Tat Property Management Pte Ltd v Management Corporation Strata Title No 360 [1990] SLR 1215 High Court, Singapore (Sinnathuray J).

Re Goodwealth Trading Pte Ltd [1990] SLR 1239; [1991] 2 MLJ 314 High Court, Singapore (Yong Pung How CJ).

Tan Guan Eng v BH Low Holdings Sdn Bhd & Ors and other actions [1992] 1 MLJ 105 High Court, Penang (Wan Adnan J).

Twenty First Century Oils Sdn Bhd (in receivership) v Twenty First Century Oleochemicals Sdn Bhd (1994) CSLR IX[132] High Court, Kuala Lumpur (Siti Norma Yaakob J).

The defendants who held about 7% of the issued capital of the plaintiffs were dissatisfied with the way the business of the plaintiffs was being managed. On 20 April 1992, the defendants sent a written requisition to the directors of the plaintiffs, giving notice pursuant to s 183 of the Companies Act (Cap 50) ('the Act') for five resolutions to be moved at the next annual general meeting. On 21 April 1992 the defendants sent another written requisition in the same terms and giving notice of two resolutions to be moved at the next annual general meeting. On 17 July 1992 the plaintiffs replied, saying that the directors had considered the resolutions carefully and had declined to include the resolutions in the agenda of the meeting. Having so decided, the directors then took out this originating summons in the name of the company to ask whether the company was bound to give its members notice of the resolutions at the next annual general meeting or any other general meeting, and for further or other relief.

Held, answering the questions raised accordingly: (1) the Act gives no definition and there are no authorities on the question of what resolutions may properly be moved; (2) under s 176 of the Act, if the object of the meeting is to do that which cannot legally be carried into effect or to pass a resolution which is ultra vires the meeting, then the directors ought not to be required to convene the meeting. If such a meeting is in fact held and a resolution passed, the directors are not bound to comply with it. The resolution is void and of no effect; (3) in s 183 the resolution to be included in the agenda has to be one 'which may properly be moved'. It seems that if the directors cannot be required to call an extraordinary meeting to pass a resolution that is ultra vires the members in general meeting, then they and the company cannot be required to include such a resolution in the agenda of an annual general meeting Ð all the more so because of the qualifying words in s 183. Such a resolution is not one which may be properly be moved; (4) art 88(1) of the articles of association of the plaintiffs vests the management of the business in the directors but subject to the statutes and articles for the time being in force and with such regulations as may be prescribed by the company in general meeting. This means that although the directors are to manage the company's business and may exercise all the company's powers, yet the company general meeting may at any time prescribe regulations which the directors must comply with; (5) art 88(1) further provides that the regulations which may be prescribed by the company in general meeting are not to be inconsistent with 'the said provisions and articles'. If the 'said provisions and articles' include this part of the article as well, then the condition as regards regulations contained in the second part of this article is rendered completely nugatory; (6) it is a question of construction and in every case the articles of association and all regulations in the form of resolutions or otherwise, having binding effect as between the members in general meeting and the directors, must be considered; (7) on the true construction of art 88(1) of the articles of association, and having regard to such other materials as have been referred to the court, the first and second resolutions dated 20 April 1992 may properly be moved within the meaning of s 183(1)(a) of the Act.

Credit Development Pte Ltd v IMO Pte Ltd [1993] 2 SLR 370 High Court, Singapore (Lim Teong Qwee JC).

The articles of SE Ltd provided that the quorum for a general meeting shall be two persons present in person or by proxy and entitled to vote. It was also provided that a person who is not a member cannot be appointed by a proxy. R, one of the only two members of the company, granted a proxy to the other, K, authorizing the latter to vote at a general meeting, inter alia, for a resolution to wind up the company voluntarily. K purportedly held a meeting at which he was the only person present and he purported to pass the said and other resolutions authorized by the proxy. To cure a defect in the appointment of liquidators K made an application to court and R applied for leave to intervene and questioned the validity of the meeting on the ground that a one-man meeting was not a properly constituted meeting under the articles. Held: (1) the articles did not authorize a one-man meeting even though the only person present held a proxy from another member of the company; (2) R was to pay the costs of proceedings and to indemnify and reimburse K all costs and expenses properly incurred by the latter in the abortive winding up.

Re Salvage Engineers Ltd [1962] MLJ 438 High Court, Federation of Malaya (Ong J).

The plaintiffs claimed payment of the balances due from the defendants to the company for shares in the company upon forfeiture of their shares. The resolution to forfeit the shares and to institute proceedings was taken at a general meeting of the company attended only by two members of whom only one had paid up his shares. The meeting was an adjourned meeting and under art 35 of the company at this adjourned meeting 'the members present should be a quorum'.

Held: (1) the meeting of the company could not be constituted by one member and therefore there was no quorum at the meeting held by the company in this case and the resolution purported to be passed was invalid; (2) as the actions were brought without authority, they must be struck out.

United Investment and Finance Ltd v Tee Chin Yong & Ors 1965 High Court, Singapore (Chua J).

The defendant company was incorporated in 1988 to take over an existing partnership business of manufacture and sale of furniture. The partners in that business were Lam Soo, Tan Choon Hua (Tan) and the plaintiff. They were partners having an equal share in the partnership, and this concept of equality remained, the partners having one equal share each in the defendant company. Tan however, had a governing share in the defendant company, which gave him a 25% voting power at all general meetings of the company and a right to appoint three governing directors. Article 87 further provided that there had to be three directors to form the quorum necessary for the transaction of the business of the directors, 'one of whom shall be a governing director'. In 1991, the relationship between the plaintiff and the other two shareholders began to go downhill. On 11 March 1995, three meetings Ð a directors' meeting followed by the annual general meeting (AGM), followed by a second directors' meeting Ð were held, the result of which was that two persons were appointed as governing directors, the plaintiff was removed as a director, and that the plaintiff's remuneration and car benefit would cease. The plaintiff was present at the first directors' meeting but left before the AGM commenced its business and did not attend the second directors' meeting. The plaintiff applied for declarations that these meetings were invalid.

Held, declaring the AGM and the second directors' meeting to be invalid: (1) under the articles of association, Tan could have announced the appointment of the two governing directors without holding the first directors' meeting. In so far as the directors' meeting was convened for the purpose solely of making this announcement, it was an unnecessary meeting. No decision was made at the meeting, so it was not necessary to make any determination as to its validity; (2) that requirement was mandatory and unalterable. As the plaintiff was not present when business was transacted at the AGM, the meeting was invalid, and none of the resolutions purportedly passed at the meeting was valid, including the resolution purporting to remove the plaintiff as a director of the defendant company; (3) the articles did not provide the answer on whether there had been a proper quorum for the third directors' meeting. The company evolved from a partnership where the partners had equal shares in the company. Since Tan had been accorded a special place in the running of the business, the articles which provided in his favour were to be read restrictively against him. Consequently, art 87 was to be read to the effect that only one of the three directors purporting to form the quorum was to be a governing director, not at least one. The third directors' meeting was, therefore, invalid; (4) the procedural irregularity in this case deprived the plaintiff of his right under the deadlock provisions of the articles to prevent any decision from being taken by the company without his agreement. There was thus a substantial injustice on the plaintiff; (5) as regards the AGM, under the articles of association, no business could be transacted unless a quorum was present;the subsequent extraordinary general meeting of the company called by the plaintiff 'to consider the appointment of the plaintiff as director until the next AGM' did not have the effect of rectifying any irregularity of the annual general meeting as it had erroneously assumed that the plaintiff had ceased to be a director when he had not.

Sum Hong Kum v Li Pin Furniture Industries Pte Ltd [1996] 2 SLR 488; (1996) CSLR IX[760] High Court, Singapore (Warren LH Khoo J).

Sum Hong Kum v Li Pin Furniture Industries Pte Ltd [1996] 2 SLR 488 High Court, Singapore (Warren LH Khoo J).

P applied for an injunction to restrain D1 from proceeding with its adjourned annual general meeting unless P had been given notice of the meeting and was permitted to attend and vote at the meeting relating to certain shares which it alleged it owned in D1. P's application was granted by the court. The shares in question were originally registered in P's name but were subsequently transferred under some form of agreement between certain parties. When the agreement fell through, P asserted that those shares is still the subject matter of litigation. Subsequently, D1 and D2 applied, inter alia, for the injunction to be set aside or discharged on the ground that P was not entitled to the injunction as it was not a registered member of D1 at the time of the application for the injunction.

Held, allowing the application: (1) in the instant case, it was not disputed that P was not a member of D1 at the material time and it followed that P was not entitled to exercise any of the rights of a member including a right to be issued with a notice of D1's annual general meeting. That being the case, its so called rights to attend and vote at the meeting were not sustainable. P, accordingly, had no legal status to injunct D1 from convening the annual general meeting when in actual fact D1 was merely complying with the statutory duties imposed on it; (2) the court, accordingly, set aside the injunction and ordered damages to be assessed.

Ming Yueh Holdings Sdn Bhd v Kong Ming Bank Bhd & Anor [1990] 1 MLJ 374 High Court, Sibu (Haidar J).

P, the shareholders of M Bhd, filed the present suit claiming for a declaration that D had a vested interest in the outcome of certain suits and that D should refrain from participating in any discussions and decisions to be made by the board of directors in respect of the above mentioned suits. P also sought for an injunction to restrain D from voting on issues concerning the said suits as per the memorandum and articles of association of M Bhd. The subject matter in the said suits related to certain disputed shares of M Bhd. D was the chairman, director and shareholder of M Bhd as well as that of Y Bhd and both M Bhd and Y Bhd were parties to the above-mentioned suits. P alleged conflict of interests and breach of fiduciary duty on the part of D. At the hearing, D raised a preliminary objection that P had no locus standi to institute the present proceedings.

Held, dismissing the preliminary objection: (1) in the instant case, P, as the shareholders of M Bhd, had the right to have the provisions of the memorandum and articles observed by injunction. The memorandum and articles of association of M Bhd constituted a contract between the members inter se; (2) in view of D's position and interests in M Bhd and Y Bhd, the justice of the case required D to refrain from taking part and voting in respect of matters pertaining to those suits of which Y Bhd was a party. In the circumstances, P as shareholders of M Bhd had the locus standi to bring the present action against D to ensure that the relevant provisions of the memorandum and articles of association were strictly complied with by D; (3) in the result, the court ordered that the hearing of P's suit be proceeded with on a date to be fixed.

Ling Beng Hui & Ors v Ling Beng Sung [1990] 2 MLJ 186 High Court, Sibu (Haidar J).

The appellant held 46.7% of the shares in Tunas Murni Sdn Bhd ('Tunas Murni') which was a defendant in the court below, with the second respondent, Wong Akau ('Wong'), holding 15.9%, and one George Thomas ('Thomas'), who was not made a party to the suit, holding 37.4%. The dispute arose in respect of three pieces of land ('the land') bought by Tunas Murni which was later transferred to the first respondent ('Krubong'). The appellant alleged that Krubong had obtained the transfer of the land by abusing a power of attorney granted by Tunas Murni to Krubong for the purpose of enabling Krubong to obtain the subdivision of the land for development. The appellant brought a minority shareholder's action by originating summons in his own name alleging fraud on a minority. The essence of the appellant's complaint turned upon alleged breaches of the fiduciary duty owed to Tunas Murni by Krubong, Wong and Thomas. The respondents, however, argued, inter alia, that the appellant's action was in substance not a derivative action as it lacked the necessary elements. The judicial commissioner dismissed the action solely on the ground that common law fraud had not been established. [See [1995] 2 MLJ 130.] The appellant appealed. In this appeal, Tunas Murni was not made a respondent although the appellant later applied to do so after some delay.

Held, dismissing the appeal on different grounds: (1) (per Gopal Sri Ram JCA) the application to add Tunas Murni as a respondent was not allowed as no satisfactory explanation was given for the delay. Also, allowing the application would have meant granting the appellant leave to appeal against Tunas Murni out of time, an adjournment of the appeal to enable service of the amended notice of appeal to be effected on all parties and the filing and service of fresh records of appeal; (2) (per Gopal Sri Ram JCA) the failure to add Thomas as a co-defendant to the main action and Tunas Murni as a respondent to the appeal were serious impediments to the appellant's action as his success or failure depended on whether he could make out the case alleged against Thomas; (3) (per Gopal Sri Ram JCA) the expression 'fraud upon the minority' is a term of art and has absolutely nothing whatsoever to do with actual fraud or deception at common law. It includes lack of probity although it is not necessary to prove dishonesty. Therefore, it is sufficient for a plaintiff to show that those wielding majority control abused the powers vested in them by using or omitting to use their powers for an oblique or collateral motive or purpose and not for the true purpose for which the power was entrusted to them either by the memorandum and articles of association, by statute or the general law. To equate common law fraud to 'fraud upon a minority' was clearly wrong; (4) (per Gopal Sri Ram JCA) a plaintiff in a derivative action cannot sue in his own name, without indicating that he is bringing the action in a representative capacity and for the benefit of the company of which he is a shareholder. A minority shareholder may bring an action on behalf of himself and all the other shareholders of the company, other than the defendants. The wrongdoers and the company must be cited as defendants. The title to the action must reflect that the suit is being brought in a representative capacity. The pleading must disclose that it is a derivative action and recite the facts that make it so. Further, there must be an express statement in the pleading that the action is being brought for the benefit of the company named as a defendant. An action that does not meet these requirements is liable to be struck out as being frivolous and vexatious; (5) (per Gopal Sri Ram JCA) there were too many flaws in the action to permit the proceedings to continue as if they had begun by writ. The intitulement of the appellant as plaintiff in his personal capacity in what purports to be a derivative action was wrong. The facts alleged did not fall within a minority shareholder's action for fraud on the minority and the relief claimed did not fit the facts alleged. As such, it was best that the appellant be given liberty to file a fresh action by way of a writ.

Abdul Rahim bin Aki v Krubong Industrial Park (Melaka) Sdn Bhd & Ors [1995] 3 MLJ 417; (1995) CSLR X[139] Court of Appeal, Kuala Lumpur (Gopal Sri Ram, Siti Norma Yaakob and Abu Mansor JJCA).

P, a shareholder of the company in question, instituted proceedings in his own name against D, the other shareholder of the company, alleging that D had obtained secret profits by diverting the company's customers to another firm. P's claims were for accounts and enquiries and payment of the sum found due thereon. P and D owned equally the equity of the company. D was the managing director of the company. D applied for P's claims to be struck out on the ground that P had no locus standi to file the present action.

Held, dismissing D's application: (1) in the instant case, the exception to the rule in Foss v Harbottle applied, namely, that a shareholder of a company can sue in his own name for the benefit of the company in respect of any act which is a fraud on the minority and where the alleged wrongdoers control the company. Being a majority or minority shareholder is not the conclusive test. What is crucial is that the alleged wrongdoer is in control; (2) in the instant case, although both P and D owned the issued capital in equal shares, D being the managing director, other things being equal, would prima facie have de facto control of the company; (3) for the reasons stated above, the learned judge held that P had locus standi to maintain the action and dismissed D's application.

Ting Chong Maa @ Tun Mun Seng v Chor Sek Choon [1989] 1 MLJ 477 High Court, Ipoh (Peh Swee Chin J).

[Annotation: ;]

In this case the appellant, representing the minority shareholders of a private company, the first respondent, claimed for a declaration that a resolution passed at the extraordinary general meeting of the company was null and void on the ground that it was ultra vires, illegal and a fraud on the minority. The resolution was to the effect that the second and third respondents, against whom judgment had been obtained for a wrong done to the company, were to be relieved of the liability to pay half of the judgment debt and taxed costs. The action was dismissed in the High Court and the appellant appealed to the Federal Court.

Held, dismissing the appeal: (1) the appellant could not maintain the action unless his case fell within the two exceptions to the rule in Foss v Harbottle (1843) 2 Hare 461, ie that the resolution was ultra vires and illegal and that it was a fraud on the minority; (2) in this case the learned trial judge was right in holding that the resolution was not ultra vires or illegal and that it was not a fraud on the minority.

Paidiah Genganaidu v Lower Perak Syndicate Sdn Bhd & Ors [1974] 1 MLJ 220 Federal Court, Ipoh (Ali, Ong Hock Sim and Raja Azlan Shah FJJ).

The appellants ('the shareholders') held about 43.75% of the shares in the first respondent ('the company'). The second respondent ('Lim') was the managing director of the company holding approximately 25.6% shares in the company. At a board of directors' meeting of the company in March 1992, it was resolved that Lim be authorized to act as representative of the company at all meetings of MGR Timber Marketing Sdn Bhd ('MGR') in which the company held 682,500 shares. Subsequently, at an extraordinary general meeting, the company resolved, inter alia, to sell the company's shares in MGR ('the shares') to Ng Kay Kim ('Ng') and Choong Keong Kor ('Choong'). A sale and purchase agreement ('the agreement') was executed between Lim, on behalf of the company, and Choong, under which Choong was to pay the company RM1.95m and obtain the discharge of a charge over land belonging to the company by paying the redemption sum, in return for the shares and also shares in two other companies belonging to the company. Unknown to the shareholders, MGR had applied to be listed on the second board of the Kuala Lumpur Stock Exchange and to offer 2.9m shares at RM2.30 each to the public. The shareholders brought a claim against the respondents, alleging fraud on themselves as the minority shareholders and alleging that the agreement was invalid as: (i) it was a device to defraud all the shareholders of the company since the shares would have fetched a higher price in the open market once MGR became public-listed; (ii) there had been an unauthorized variation of the terms of the agreement; and (iii) the company had resolved to sell the shares to both Ng and Choong and not Choong alone. The shareholders obtained an ex parte interlocutory injunction against the respondents which was subsequently set aside by the same judge who found, inter alia, that: (i) the shareholders had no locus standi as the proper party to bring the action was the company; (ii) there was a delay in applying for the injunction; and (iii) damages were an adequate remedy. The shareholders have appealed.

Held, allowing the appeal: (1) in deciding whether to grant an interlocutory injunction, the court must first consider whether the plaintiff's case raises serious issues to be tried and whether the injunction is a means of preserving the status quo pending trial. In this case, the judge had failed to consider the question of serious issues to be tried although all the issues raised by the shareholders were prima facie serious issues to be tried; (2) if the respondents were alleging that the shareholders had no locus standi or cause of action, they should have invoked O 18 r 19 or O 33 r 2 of the Rules of the High Court 1980 ('the RHC') but did not. On this ground alone, the appeal should succeed; (3) furthermore, on the issue of locus standi, the judge should have but did not decide whether the shareholders came within the exception to the rule in [BI]Foss v Harbottle[EI] (1843) 2 Hare 461, ie that aggrieved shareholders could bring an action on behalf of themselves where the wrongdoers were in control of the company; (4) there was no delay on the part of the shareholders in applying for the injunction as time began to run from the discovery of the fraud, which was hardly two weeks before the writ was filed; (5) damages were not an adequate remedy as the different heads of damages claimed, eg for loss resulting from misuse of information by Lim and damages for fraud, could not be quantified easily; (6) the balance of convenience clearly lay with the shareholders. If the interlocutory injunction is granted and the shareholders should fail at the trial, all that the respondents would suffer is the loss of profits and costs of the litigation which can be quantified and compensated, whereas if the injunction is refused and the shareholders should succeed, they would suffer unquantified monetary loss, harm and inconvenience which could not be adequately recompensed. In addition, since there was no evidence of the transfer of the shares to Choong or to any other persons, the status quo could be preserved.

Alor Janggus Soon Seng Trading Sdn Bhd & Ors v Sey Hoe Sdn Bhd & Ors [1995] 1 MLJ 241; (1995) CSLR X[138] Supreme Court, Kuala Lumpur (Jemuri Serjan CJ (Borneo).

The appellant held 46.7% of the shares in Tunas Murni Sdn Bhd ('Tunas Murni') which was a defendant in the court below, with the second respondent, Wong Akau ('Wong'), holding 15.9%, and one George Thomas ('Thomas'), who was not made a party to the suit, holding 37.4%. The dispute arose in respect of three pieces of land ('the land') bought by Tunas Murni which was later transferred to the first respondent ('Krubong'). The appellant alleged that Krubong had obtained the transfer of the land by abusing a power of attorney granted by Tunas Murni to Krubong for the purpose of enabling Krubong to obtain the subdivision of the land for development. The appellant brought a minority shareholder's action by originating summons in his own name alleging fraud on a minority. The essence of the appellant's complaint turned upon alleged breaches of the fiduciary duty owed to Tunas Murni by Krubong, Wong and Thomas. The respondents, however, argued, inter alia, that the appellant's action was in substance not a derivative action as it lacked the necessary elements. The judicial commissioner dismissed the action solely on the ground that common law fraud had not been established. [See [1995] 2 MLJ 130.] The appellant appealed. In this appeal, Tunas Murni was not made a respondent although the appellant later applied to do so after some delay.

Held, dismissing the appeal on different grounds: (1) (per Gopal Sri Ram JCA) the application to add Tunas Murni as a respondent was not allowed as no satisfactory explanation was given for the delay. Also, allowing the application would have meant granting the appellant leave to appeal against Tunas Murni out of time, an adjournment of the appeal to enable service of the amended notice of appeal to be effected on all parties and the filing and service of fresh records of appeal; (2) (per Gopal Sri Ram JCA) the failure to add Thomas as a co-defendant to the main action and Tunas Murni as a respondent to the appeal were serious impediments to the appellant's action as his success or failure depended on whether he could make out the case alleged against Thomas; (3) (per Gopal Sri Ram JCA) the expression 'fraud upon the minority' is a term of art and has absolutely nothing whatsoever to do with actual fraud or deception at common law. It includes lack of probity although it is not necessary to prove dishonesty. Therefore, it is sufficient for a plaintiff to show that those wielding majority control abused the powers vested in them by using or omitting to use their powers for an oblique or collateral motive or purpose and not for the true purpose for which the power was entrusted to them either by the memorandum and articles of association, by statute or the general law. To equate common law fraud to 'fraud upon a minority' was clearly wrong; (4) (per Gopal Sri Ram JCA) a plaintiff in a derivative action cannot sue in his own name, without indicating that he is bringing the action in a representative capacity and for the benefit of the company of which he is a shareholder. A minority shareholder may bring an action on behalf of himself and all the other shareholders of the company, other than the defendants. The wrongdoers and the company must be cited as defendants. The title to the action must reflect that the suit is being brought in a representative capacity. The pleading must disclose that it is a derivative action and recite the facts that make it so. Further, there must be an express statement in the pleading that the action is being brought for the benefit of the company named as a defendant. An action that does not meet these requirements is liable to be struck out as being frivolous and vexatious; (5) (per Gopal Sri Ram JCA) there were too many flaws in the action to permit the proceedings to continue as if they had begun by writ. The intitulement of the appellant as plaintiff in his personal capacity in what purports to be a derivative action was wrong. The facts alleged did not fall within a minority shareholder's action for fraud on the minority and the relief claimed did not fit the facts alleged. As such, it was best that the appellant be given liberty to file a fresh action by way of a writ.

Abdul Rahim bin Aki v Krubong Industrial Park (Melaka) Sdn Bhd & Ors [1995] 3 MLJ 417; (1995) CSLR X[139] Court of Appeal, Kuala Lumpur (Gopal Sri Ram, Siti Norma Yaakob and Abu Mansor JJCA).

The company was incorporated by SQ Wong with a nominal capital of $100,000 divided into 100,000 shares of $1 each. SQ Wong owned all the issued preference shares (90,002) and the children and grandchildren together owned all the issued ordinary shares (48) of the company. In his will, SQ Wong appointed Hong Kong and Shanghai Bank (Singapore) Trustee Ltd as the sole executor and trustee and he bequeathed his residuary estate to Mabel Hudson (including 90,002 preference shares). No dividends were paid during SQ Wong's lifetime. SQ Wong appointed WPT, Mabel Hudson and WPY as directors with WPT as his deputy. SQ Wong died on 11 October 1980, and WPT succeeded to the position of Governing Director of the company. On 20 October 1980, WPT ceased to be the Governing Director when he resigned as a director. On 4 February 1983, the Hong Kong and Shanghai Bank (Singapore) Trustee Ltd was granted probate of the will of SQ Wong. The grant of probate was not extracted, the 90,002 preference shares remained registered in the name of SQ Wong until 14 September 1985. Under the articles the preference shares had voting rights as long as dividends were in arrears. The directors declined to pay dividends. On 31 July 1985, the petitioners requisitioned the extraordinary general meeting of the company with a view to removing the directors and appointing Joyce Liu and Wong Hong Ching in their place. The petitioners contended that (a) the 90,002 preference shares could not be voted as they were not registered in the name of Mabel Hudson; (b) as directors, Mabel Hudson and Benjamin Wong ought to have paid the accumulated dividend on those preference shares; (c) they deliberately withheld doing so in breach of the articles of association with the collateral purpose of ensuring that the preference shares had voting rights and using such rights to defeat the voting rights of the majority of the ordinary shares held by the petitioners.

Held, granting the petition: (1) in law, the directors have a discretion whether or not to recommend a dividend, even on the preference shares, but this discretion must be exercised fairly and honestly in the interest of the company. They would not be acting honestly or fairly if the discretion were exercised to deny the preferential shareholders their rights for a collateral purpose; (2) the deprivation or attempted deprivation of majority control by directors out of self interest or for personal advantage is the classic form of oppression; (3) the petitioners made out a case of oppression under s 216(1)(a) of the Companies Act in that the affairs of the company were being conducted or the powers of the directors were being exercised in a manner oppressive to the petitioners as members or in disregard of their interests as shareholders.

Re SQ Wong Holdings (Pte) Ltd [1987] 2 MLJ 298 High Court, Singapore (Chan Sek Keong JC).

In 1993, the appellants and one Yap Choon Heng (Yap) incorporated a company known as North Shore Marina Pte Ltd ('the company') to bid for a site in Ponggol set aside by the Urban Redevelopment Authority for boatel development. They were the first directors and shareholders of the company, each holding a share worth S$1. The company was advised that an appropriate bid price for the site was S$17.5m, 10% of which was to be submitted with the bid. As the company did not have the financial means to submit a bid the appellants and Yap invited the respondent to participate in the project. On 24 February 1994, a memorandum of understanding ('the memorandum') was signed by the parties which enabled the company to submit a bid. By cl 1 of the memorandum the parties agreed that in consideration of the respondent paying the initial deposit of S$1.75m, (i) the respondent would be appointed a director of the company; (ii) 16 shares would be allotted to him; (iii) the appellants and Yap would pay the respondent S$87,500 each within two weeks of the memorandum; and (iv) the respondent would have an 80% of the interest in the tender while the appellants and Yap would each have a 5% interest in the tender. By cl 2 of the memorandum if any one of the appellants or Yap were to fail to pay up in time pursuant to cl 1(iii) his interest in the tender would pass to the respondent. On the same day the appellants and Yap resolved at a board meeting to appoint the respondent as a director and to allot 16 shares to him. On 9 March 1994 Yap paid the respondent. The appellants failed to do so. At an extraordinary general meeting the appellants, Yap and the respondent resolved that every shareholder or group of shareholders with 20% of the fully paid shares should have the right to nominate a director and that upon the nomination of the new directors, the present ones would resign. Three new directors were appointed. A return lodged with the Registrar of Companies stated that the appellants ceased to be directors of the company from 9 March 1994. At a board meeting also held on 9 March 1994 the same five persons resolved to approve the transfers of one share each from the appellants to the respondent 'upon the said transfer being executed by É the transferee', stamped and delivered to the company. Subsequently, there were offers dated 9 March 1994, 11 March 1994 and 27 April 1994 by the respondent to sell his shares in the company to the appellants. These offers were allowed to lapse by the appellants' failure to pay in time. Meanwhile, the tender was awarded to the company on 4 April 1994. On 6 May 1994 and 1 July 1994, the company in general meeting allotted 4,756,244 and 4,243,756 shares respectively to new members, raising S$9m as capital for the company. On 26 July 1994 the appellants applied to the High Court for leave to commence proceedings in the name of the company on the ground that acts of the company unfairly discriminated against or were prejudicial to the appellants as members of the company. Specifically, they complained of the issue of the 16 shares by the company to the respondent, the company's request for the resignations of the appellants as directors and the further issue of nine million shares by the company. The petition was dismissed. On appeal, the same three acts formed the subject matter of the complaint. In addition, counsel raised the question of the legal and beneficial ownership of the three shares originally held by the appellants.

Held, dismissing the appeal: (1) s 161(1) of the Companies Act (Cap 50, 1994 Ed) was put in place primarily to protect the interests of shareholders so that directors could not act to their detriment without their knowledge and prior consent. Although there was a requirement for any resolution giving prior approval to be filed, the failure to do so only attracted a fine. By itself, it did not vitiate the approval and consent of the shareholders. More crucially, it did not make the issue of the shares void. Therefore, the protection within s 161 was fully afforded by an informal and unanimous consent and approval of all the members of a company; (2) the appellants and Yap, as the sole shareholders and directors, were present at a meeting on 24 February 1994 described as a board meeting in which they resolved to issue the 16 shares to the respondent. The purpose of the particular resolution was to comply with cl 1(iii) of the memorandum. Apart from being a board meeting it was de facto a meeting of all the shareholders in the company. The appellants and Yap were competent to act to achieve the desired result of allotting the shares during the meeting. As shareholders, they gave unanimous approval and as directors, they effectively allotted the shares. There was no contravention of s 161(1). By allotting the shares, the company gave effect to the wishes of the appellants to allow the respondent to participate in the project. The company did not act in a manner prejudicial to or unfairly discriminatory against the appellants; (3) to successfully transfer legal title in a share the transferee's name must be entered into the register of the members maintained by a company. In this regard, s 126 of the Companies Act required a proper instrument of transfer to be delivered to the company before the company should register such a transfer. A proper instrument of transfer must be one executed by the person registered as a holder of the shares in question. A transferee did not have the capacity to execute a transfer document in favour of himself. In the instant case, art 24 of the articles of association stated the position quite clearly. The appellants did not execute any transfer document in respect of the three shares. They remained the legal owners of the shares; (4) the phrase 'interest in the tender' must be read in the context of the entire memorandum at the time it was entered into. It should be equated with the shares of the company. Contained within cl 2 was an agreement for the appellants to transfer their shares in the company to the respondent if they were to fail to comply with cl 1(iv) by 9 March 1994. Subsequent to their failure to pay the respondent, the appellants were no longer the sole beneficial owners of the shares, even though they possessed some beneficial interest by virtue of the contractual offers made by the respondent; (5) the appellants resigned on 9 March 1994 pursuant to the company meeting on the same day. Their resignations were brought about by their failure to comply with the terms of the memorandum. They were not asked to resign. Even if they were asked to resign, the forced resignation would not be an act unfairly discriminatory or prejudicial to their rights as members of the company. The appellants were not entitled to any rights to management; (6) by 6 May 1994 when the first lot of the nine million shares was issued, all the contractual offers by the respondent had lapsed for some time. The last offer on 27 April 1994 lapsed on the very same day. From 27 April 1994, the appellants were bare legal owners of the shares, not having transferred their legal title in the shares to the respondent. They held these shares wholly on trust for the respondent. They had to act in accordance with the respondent's wishes. In the circumstances, the act of the company could hardly be said to be unfairly discriminatory or prejudicial to the appellants.

Jimat bin Awang & Ors v Lai Wee Ngen [1995] 3 SLR 769; (1995) CSLR VIII[128] Court of Appeal, Singapore (Karthigesu and LP Thean JJA, Lai Kew Chai J).

The petitioners in this case are the minority shareholders of United Motor Works Pte Ltd ('UMW'). The largest shareholder of UMW is Guan Leng Holdings ('Guan Leng') who also formed the majority of UMW's board of directors. Sometime, in 1992, United Motor Works (Siam) Ltd ('UMW Siam') proposed to acquire all of UMW's shares. Subsequently in 1993, at an extraordinary general meeting of UMW, a resolution was proposed to amend the articles of association and remove the pre-emption rights of existing shareholders in the event of a proposed sale of shares. This was to facilitate UMW Siam's proposed acquisition. The petitioners were dissatisfied that Guan Leng had agreed to sell the share to UMW Siam without first granting the petitioners the pre-emption rights. They therefore petitioned under s 216 of the Companies Act (Cap 50, 1994 Ed) ('the Act') alleging that the breach of the pre-emption provisions, the threat to alter UMW's articles of association and the resulting sale of UMW's shares to UMW Siam amounted to oppression or unfair discrimination or prejudice within s 216 of the Act. The petitioners however failed to take out summons for directions after presentation of their petition. On 9 January 1995, almost two years after the presentation of the petition, the petitioners applied to amend the petition.

Held, dismissing the application: (1) amendments ought to be made for the purpose of determining the real question in controversy between the parties subject to terms as to costs or otherwise and provided that no injustice will be done to the parties having regard to all the circumstances; (2) the fact that the application to amend is very late ie two years later, is of no real consequence because when the application was made, the petition was not ready to be heard yet and no directions had been made for the hearing; (3) an amendment will not be allowed if it serves no purpose. It will serve no purpose if it makes allegations which are not relevant. It is for the petitioners to satisfy the court that the new allegations are relevant; (4) on the facts, the proposed amendments contain some allegations as to matters which are relevant but they are so mixed up with those which are not that the proper course is to dismiss the application without prejudice to the petitioners making a fresh application to further amend the petition.

Re United Motor Works Pte Ltd (1996) CSLR X[667] High Court, Singapore (Lim Teong Qwee JC).

The appellant had applied by originating summons in his capacity as member of the first respondent company for a series of orders the gist of which was that the second and third respondents be removed from office as managing director and director respectively and a receiver and manager be appointed to conduct the company's affairs and for repayment of various sums alleged to have been disposed off wrongfully or without proper authorization. The company was a family one in which the elder brothers were the majority shareholders. The appellant and the two younger brothers were the minority shareholders. The appellant was appointed a director of the company but took no active part in its affairs and ceased to be a director in 1971. It was alleged that the second and third respondents had committed breaches of their powers as directors of the company and in particular complaint was made relating to: (a) purchase and outfitting of a motor yacht, Berjaya Malaysia; (b) donations to political parties; (c) drawings by the second and third respondents from the company funds. It appeared that after inquiries instituted by the appellant many of the acts of the second and third respondents were validated by resolutions of the company. The learned trial judge dismissed the application and the appellant appealed to the Federal Court.

Held, allowing the appeal: (1) there are two fundamental principles as regards the position of directors. First, they are the trustees of the company's money and property in the sense that they must account for all the company's money and property over which they exercise control and must refund to the company any money or property which they have improperly paid away. Second, they are trustees of the powers entrusted to them in the sense that they must exercise their powers honestly and in the interests of the company and the shareholders and not in their own interests, failing which they may render themselves liable for their misuse of such powers; (2) in this case, the purchase by the second respondent of the yacht, Berjaya Malaysia, was misuse of the company's funds and the moneys which he paid out or had himself reimbursed from the company's funds in respect of the donations to the Sarawak Chinese Association and SNAP were improperly paid away. The second respondent should therefore take over Berjaya Malaysia and pay to the company all the money spent on it and also pay the company the amount of donations paid to the political parties; (3) there was no authority for the substantial drawings taken by the second and third respondents and these were done in contravention of the provisions of the Companies Act 1965, being loans to directors of a public company; (4) the fact that the appellant was a director of the company during the relevant period did not prevent him from taking the action, as there was no action to show that he had knowledge of or had taken part in any of the acts complained of; (5) the rule in Foss v Harbottle did not preclude the appellant from taking action as the acts complained of in this case constituted a fraud in the minority of the shareholders and quite apart from the question of fraud the rule is no bar to an individual shareholder making an application to the court under s 181 of the Companies Act 1965; (6) in order to protect the minority shareholders in this case the court would order: (i) that one of the younger brothers be appointed as director to safeguard their interests; (ii) that donations be made in future only with approval of the board of directors; (iii) that no bank account be operated without the signatures of two directors, one of whom shall be other than the elder brother, the majority shareholder; (iv) that no moneys be drawn by any of the directors without the prior approval of the board; (v) that the power delegated to the first respondent to make investment on behalf of the company be cancelled; (vi) that three clear days' notice be given in writing of any directors' meeting; and (vii) that the bonus for the directors in future be 2% of the nett profits and that no bonus be paid until after the passing of the company's accounts at the annual general meeting.

Re Kong Thai Sawmill (Miri) Sdn Bhd; Ling Beng Sung v Kong Thai Sawmill (Miri) Sdn Bhd & Ors [1976] 1 MLJ 59 Federal Court, Kuching (Gill CJ (Malaya).

[Annotation: Reversed on appeal. See [1978] 2 MLJ 227.]

This was an application by the petitioner, a member and shareholder of the company known as La Mar Diamant (Overseas) Pte Ltd ('the company'), for relief under s 216 of the Companies Act (Cap 50) ('the Act'). At the first hearing, certain orders were made in favour of the petitioner. Subsequently, the petitioner applied to vary the terms of the orders that had been made.

Held, disallowing the application: (1) under s 216 of the Act, the court has wide powers to grant relief where (a) 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 members or debenture-holders of the company, or in disregard of their interests as members, shareholders or debenture-holders, or (b) if some act of the company has been done or is threatened or some resolution of the members or any class of them has been passed or proposed which unfairly discriminates against or is otherwise prejudicial to one or more of the members of the company; (2) it is generally accepted that the word 'oppression' connotes conduct which is 'burdensome, harsh and wrongful', or conduct which is unfair to other members of the company and which lacks that degree of probity which they are entitled to expect in the conduct of the company's affairs. It may also connote conduct which is a visible departure from the standards of fair dealing and fair play which a member is entitled to expect; (3) by the same token, it is clear that the fact that a shareholder disagrees with the policies or executive decisions of those who form the majority will not be sufficient to establish oppression; (4) the evidence here clearly established that there was in fact an agreement between the parties that the petitioner would have equal say in the management of the company, which necessarily entailed a seat on the board of directors; (5) by denying the petitioner access to the company's financial records, the respondent was effectively denying the petitioner the right to participate in management. This was a clear breach of the agreement particularly since it had been envisaged that the petitioner would be a joint signatory for 'certain operations'. The petitioner would not have been able to make informed decisions without free access to information; (6) as the petitioner's work for the company was to be the basis of his application for an employment pass, the company would have to sponsor it. The effect of the respondent's admitted refusal to allow the company to sponsor the petitioner's application was that he was effectively barred from participating in the running of the company; (7) the company here was, in reality, an incorporated partnership, with the two shareholders taking the role of partners in the enterprise; (8) the exclusion of a member from the management of a company in breach of an express or implied understanding to allow him to participate in the management of the company would also justify relief under s 216. In the context of a winding up, it has been held that to deprive a member of his right to participate in the management of the company in contravention of an express or implied agreement to allow him to do so would justify winding up on the just and equitable ground. It is inconceivable that the court would grant the drastic remedy of a winding up and yet decline to grant some lesser relief under s 216 if that was asked for; (9) on the basis of the breach of agreement, the fact that the petitioner held 50% of the paid-up share capital of the company, and the manner in which the company was being run after the respondent excluded the petitioner from the management of the company, showed clearly that there was no serious effort made for the company to resume trading activity as the petitioner qua shareholder and member was entitled to expect. The respondent's conduct was wrongful and unfair and there is therefore no basis for the respondent's claim that there had been no oppression of the petitioner in his capacity as a shareholder and member.

Re La Mar Diamant (Overseas) Pte Ltd (1993) CSLR X[645] High Court, Singapore (Lai Siu Chiu JC).

The plaintiffs and another shareholder had contracted by written agreement dated 8 April 1981 to sell to the defendants 97% of their shares in Lemo Sdn Bhd ('Lemo') and disputes had arisen between the plaintiffs and the defendants. After filing the writ and statement of claim against the defendants, the plaintiffs applied for and obtained an ex parte interim injunction against the defendants restraining them from, inter alia, managing the affairs of Lemo. The plaintiffs did not disclose that the defendants were the registered owners of 51% of the shares in Lemo and that prior to the application the second plaintiff had varied the agreement of sale of 8 April 1981. The defendants applied for discharge of the injunction.

Held, allowing the application: (1) as the plaintiffs had not disclosed that the defendants owned 51% of the shares in Lemo and that the second plaintiff had varied on 16 November 1981 the agreement of 8 April 1981 regarding his 18% of the shares and waiving the requirement for approval of the Foreign Investment Committee, the injunction should be discharged on this ground of non-disclosure alone; (2) since the defendants had acquired the controlling interest in Lemo, it is not proper for the court by injunction to restrain the defendants, their directors or servants from the management of the affairs of Lemo. The appropriate remedy would be under s 181 of the Companies Act if there was oppression. The cheque books, books of accounts, company seal, share register, etc of Lemo should not be handed over to the first plaintiff, who, as shareholder and vendor, had no property in the property of Lemo; (3) the status quo is best preserved by reverting the parties to their respective positions immediately before the granting of the interim injunction. The court considers it more beneficial, or, in negative expressions, less harmful to Lemo for the defendants to retain possession and management of the oil palm estate, the principal asset of Lemo, until final disposal of the suit or further order of the court.

Leong Wan Yin & Anor v Nestra Plantations Sdn Bhd [1982] 2 MLJ 65 High Court, Seremban (Wong Kim Fatt JC).

The petitioner as a minority shareholder of the tenth respondent, KFC Holdings (Malaysia) Bhd, brought this petition under s 181 of the Companies Act 1965 (the Act). The petitioner was induced to purchase a stake in the tenth respondent by Ishak, a director of the tenth respondent, and Ting, the chief executive officer (CEO) and managing director of the tenth respondent, on the representation, inter alia, that upon the petitioner taking up a 20% stake in the company, the petitioner's nominees would be appointed on the board of directors and the petitioner would manage certain operations of the tenth respondent. By a management agreement dated 12 March 1993, these representations were put into effect. At a board meeting, it was proposed that an additional 10% each of the issued capital of the tenth respondent be allotted to two other companies. The petitioner objected to the proposal and when the objections were not entertained, it commenced proceedings under s 181 of the Act. An injunction restraining the tenth respondent from issuing and allotting the shares was obtained. Subsequently, a second agreement was entered into whereby the petitioner agreed to withdraw the petition and discharge the injunction on the condition that the board was reconstituted so that no single party could make any financial commitment without joint approval. The petitioner claimed that having failed in the attempt to expel or preclude them from participating in the management of the tenth respondent, the Ishak faction (the first to seventh respondents) sought the assistance of KFC International (the eighth respondent). Thereafter, the ninth respondent (Lane), who was the president of KFC International for the Asia-Pacific region, threatened to withdraw the franchise agreement, since the Ishak faction had lost control of the company, unless he was given board representation and non-essential personnel were evicted. However, it was decided that Lane would be invited to attend board meetings as and when it was necessary. On 6 December 1994, Lane accused the tenth respondent of having breached the franchise agreement in an article in a local newspaper. Consequently, the petitioner requisitioned an extraordinary general meeting (EGM) for the removal of Ting as CEO and managing director of the company. The Ishak faction responded by requisitioning for an EGM to remove the petitioner's nominees as directors of the company and to appoint Lane as director of the company. Both parties, however, agreed to withdraw their respective requisitions and the meetings were called off. In breach of this agreement, the Ishak faction gave notice that an EGM be held on 18 February 1995. The petitioner brought this petition, stating that the Ishak faction and the eighth respondent were using the franchise agreement as an instrument of oppression to get rid of the petitioner's nominees on the board and to prevent the petitioner from further participating in the management of the company. The respondents made an application for an order that the petition be struck out under O 18 r 19(1)(a) of the Rules of the High Court 1980 on the ground that the petition did not disclose a reasonable cause of action. The respondent claimed that the petitioner's remedy, if any, was in common law for breach of contract, namely the management agreement, and not by recourse to the provisions of the Act.

Held, dismissing the respondents' application: (1) there was a reasonable cause of action disclosed in the petition. The petition was properly brought under s 181 of the Companies Act 1965 and the petitioner was not restricted in seeking redress in a civil suit under the common law; (2) the cases on legitimate expectation cited by the counsel for the first respondent were complex and warranted forensic consideration at a trial and not under O 18 r 19(1)(a). A trial was required to consider all the evidence including equitable considerations referred to by counsel for the petitioner; (3) the petition should not be struck out without a thoroughly researched consideration of whether s 128(1) of the Act could override the provisions of s 181; (4) company law recognized the right, in many ways, to remove a director from the board. The director must normally accept the situation unless he undertook the burden of proving fraud or mala fides. The just and equitable provision, nevertheless, comes to his assistance if he can point to and prove some special underlying obligation of his fellow members in good faith or confidence that so long as the business continues, he shall be entitled to management participation; (5) the court was not bound to shut its eyes to the conduct of the parties over a period that was material to the case in deciding whether one had behaved in a fair or just manner to the other. The court was obliged to take into account all the circumstances of the case including events antecedent to the making of the written document and even what was said in the course of negotiations leading up to the formalization of the written document; (6) equitable obliga-tions could be allowed to override the rights and duties imposed by the memorandum and articles of association of a company and the laws pertaining to companies.

Leong Hup Holdings Bhd v Tuan Haji Ishak bin Ismail & Ors (1995) CSLR X[655] High Court, Kuala Lumpur (Richard Talalla J).

[Annotation: Reversed on appeal. See [1996] 1 MLJ 661.]

The respondent in this case had applied by originating summons in his capacity as a member of the first appellant company for a number of orders the gist of which was that the second and third appellants be removed from office as managing director and director respectively and a receiver and a manager be appointed to conduct the company's affairs and for repayment of various sums alleged to have been disposed of wrongfully or without proper authorization. There was an alternative relief asked for that the company be wound up. The company was a family one in which the elder brothers (the second and third appellants) were the majority shareholders. The respondent and two younger brothers were minority shareholders. It was alleged that the second and third appellants had committed breaches of their powers as directors of the company and in particular complaint was made relating to (a) the purchase and outfitting of a motor yacht, Berjaya Malaysia; (b) loan to Encik Harun Ariffin; (c) donations to political parties; (d) advances to and investments in joint ventures; (e) drawing by the second and third appellants from the company's funds and (f) remuneration paid to the second appellant as managing director. It appeared that after inquiries instituted by the respondent many of the acts of the second and third appellants were validated by resolutions of the company. The learned trial judge dismissed the application but on appeal the Federal Court ([1976] 1 MLJ 59) held that (a) the purchase by the second appellant of the yacht, Berjaya Malaysia, was misuse of the company's funds and the moneys which he had paid out or for which he had himself reimbursed from the company's funds in respect of the donations to political parties were improperly paid. The second appellant should therefore take over the Berjaya Malaysia and pay to the company all the money spent on it and also pay the company the amount of donations paid to the political parties; (b) in order to protect the minority shareholders in this case the court would order that (i) one of the younger brothers be appointed a director to safeguard their interests; (ii) donations be made in future only with the prior approval of the board of directors; (iii) no bank account be operated without the signatures of two directors, one of whom shall be other than the elder brothers, the majority shareholders; (iv) no moneys be drawn by any of the directors without the prior approval of the board; (v) the power delegated to the first respondent to make investments on behalf of the company be cancelled; (vi) three clear days' notice be given in writing of any directors' meetings and (vii) that the bonus for the directors in future be 2% of the nett profits and that no bonus be paid until after the passing of the company's accounts at the annual general meeting. The appellants appealed.

Held: (1) the courts in applying s 181 of the Companies Act 1965 (Act 125), should do so according to its terms and its purpose and should not regard themselves as necessarily bound by UK decisions which were based upon a different section and in some cases restrictive. The same would apply, though with less force, to reliance upon Australian decisions based upon s 186 of the Australian Companies Act 1951; (2) the section required 'oppression' or 'disregard' to be shown and these were not necessary elements in a minority shareholders' action. But if a case of 'oppression' or 'disregard' were made out the section would apply and it was no answer to say that the relief might also have been obtained in a minority shareholders' action; (3) for the case to be brought within s 181(1)(a) of the Companies Act 1965 at all, the complaint must identify and prove 'oppression' or 'disregard'. The mere fact that one or more of those managing the company possessed a majority of the voting power and, in reliance upon that power, made policy or executive decisions, with which the complainant did not agree, was not enough. There must be a visible departure from the standards of fair dealing and a violation of the conditions of fair play which a shareholder was entitled to expect before a case of oppression could be made out. Similarly 'disregard' involved 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; (4) what was attacked by s 181(1)(a) of the Companies Act was not particular acts but the manner in which the affairs of the company was being conducted or the powers of the directors exercised. These might be held to be 'oppressive' or 'in disregard' even though a particular objectionable act might have been remedied; (5) in this case none of the nine particular complaints listed by the Federal Court were substantiated and such relief as the Federal Court decided to give in respect of four of them could not be justified. There was no occasion to grant the ancillary relief under the remaining heads; (6) and the interests of other members of the company not involved in the proceedings. In this case the respondent had failed completely to make out a case for winding up the company; (7) relief could not be sought under s 181 of the Companies Act 1965 merely because facts were established which would found a minority shareholders' action;the grant of winding up was in the discretion of the court. In exercising this discretion the court would have in mind the character of the remedy, if sought to be applied to a company which was a going concern; it would take into account, inter alia, the gravity of the case made out under s 181(1) of the Companies Act 1965; the possibility of remedying the complaints proved in other ways than by winding the company up; the interest of the applicant in the company;the remuneration of the directors and of the managing director which had been regularly voted and approved by the shareholders was a matter for them and no case could be made for interfering with that decision.

Re Kong Thai Sawmill (Miri) Sdn Bhd; Kong Thai Sawmill (Miri) Sdn Bhd & Ors v Ling Beng Sung [1978] 2 MLJ 227 Privy Council Appeal from Malaysia (Lord Wilberforce, Viscount Dilhorne, Lord Salmon, Lord Fraser of Tullybelton and Sir Garfield Barwick).

[Annotation: Decision of the Federal Court [1976] 1 MLJ 59 reversed.]

It was alleged by the applicant, a minority shareholder, that she was prevented from attending meetings, that resolutions were passed by the first respondent (the majority shareholder) which were detrimental to the company, that dividends were declared without the authority of the directors, that the respondent took unauthorized loans from the company and that the first respondent drew a salary even though he was absent from Malaysia for three and a half years.

Held: (1) the acts of the first respondent constituted an oppression on minority shareholders; (2) the applicant was entitled to a relief, but that relief should be aimed at bringing an end to or remedying the matters complained of.

Re Coliseum Stand Car Service Ltd; Abdul Khalik v Mohamed Jee & Ors [1972] 1 MLJ 109 High Court, Kuala Lumpur (Abdul Hamid J).

[Annotation: For related proceedings, see [1986] 1 MLJ 66.]

The company was incorporated on the instructions of Rimaco Pte Ltd, of which the petitioner was the majority shareholder. The directors of the company were Gloor, Cleward and the petitioner, all of whom held 10,000 shares. Disputes arose between the petitioner and the other directors. The petitioner subsequently resigned as a director. The directors increased the company's share capital by allotting shares to a Hong Kong company, in which they held all the shares. They also transferred their shares to the Hong Kong company. This left the petitioner with 10,000 out of 500,000 shares, the rest being held by the Hong Kong company. An EGM was subsequently called to amend the memorandum and articles so that the petitioner's shares could be expropriated. The petitioner petitioned for the winding up of Petrotech on the grounds that the directors had acted in the affairs of the company in their own interest rather than in the interest of the members as a whole.

Held: in view of the facts and circumstances of the case, to order the petitioner to sell his shares to Petrotech would be tantamount to giving the court's backing to the high-handed action of the directors of Petrotech in trying to expropriate the petitioner's shares in Petrotech by amending its memorandum and articles of association. The winding-up petition was struck out but the petitioner was granted the option to purchase as many Petrotech shares as he wished at par provided he exercised such option by 30 September 1981. The resolution amending the memorandum and articles was cancelled.

Re Petrotech Logistics Pte Ltd 1982 High Court, Singapore (Abdul Wahab Ghows J).

Kanari Resorts Pte Ltd (the company) was incorporated, with one Raymond Lim, the majority shareholder (Lim), Teoh Siang Teik (the petitioner), and two others (Tan and Ng) as the subscribers and directors for the purpose of becoming the non-Indonesian partner in a joint venture Indonesian company that was to be called PMA Co. The company was incorporated after Lim, the petitioner and Tan entered into a loan agreement whereby Tan agreed to advance a certain sum of money to the company in consideration, inter alia, for an option to purchase shares in the Singapore company from Lim at an agreed price. One of the requirements of the loan agreement was that the PMA company should be incorporated by 15 January 1994. Tan subsequently chose not to exercise the option. Lim and the petitioner were the only registered shareholders in the company: the petitioner owned one share in the company and Lim, 49,997. There was, nevertheless, another agreement, the Kanari Project Funding Agreement, between Lim and the petitioner, which recited the fact that 158 ha of land had been acquired in Indonesia, of which land Lim owned 90% and the petitioner 10%. It also specifically stated that Lim was the beneficial owner of 87.5% of the shares in the company and that the petitioner was the beneficial owner of 12.5%. This agreement reflected the petitioner's interests as agreed upon prior to the incorporation of the company, when the petitioner and Lim first commenced on the project of developing a resort in Manado, Indonesia, and began acquiring land for the project. The company itself had only been incorporated sometime later in an attempt to obtain funds from Tan to salvage the project when other investors in the project withdrew. In these proceedings under s 216 of the Companies Act (Cap 50, 1994 Ed), the petitioner complained of acts of oppression by Lim in the conduct of its affairs. The acts and omissions alleged to constitute oppression included, inter alia, denial of important information and documents, and refusal to recognize the petitioner's interest in the company. Counsel for Lim and the company, contended, firstly, that the company was incorporated for one purpose only Ð to enable Lim to sell to Tan an interest in part of the project land. Since, apart from the adoption of accounts and the annual reports, the company had not conducted any activity since its incorporation, it could not be said that there had been any activity that was oppressive of the petitioner or in disregard of his interest. Secondly, it was contended that Lim was under no obligation to account to the petitioner for the progress of the project land and the incorporation of the PMA company: Lim's obligations to do these things was founded solely upon his obligation to Tan under the loan agreement. Thirdly, it was contended that the petitioner was in effect attempting, through these proceedings, to enforce his rights against Lim as a 10% co-owner of the project land and to enforce his rights against Lim under the funding agreement. The petitioner was therefore using the proceedings for a collateral purpose.

Held, allowing the petition: (1) it was not possible to say in the instant case that the conduct of Lim was separate from his conduct as a director of the company.The company as an intended joint venture partner had a direct interest of a very real kind in what Lim did in the matter of the acquisition and disposal of the land, and in the matter of the formation of the joint venture company. Lim could not take advantage of the fact that he had chosen not to call directors' meetings, and not to report to the directors or to the company the progress of the matters entrusted to him. He could not be allowed to say that he had not acted in the affairs of the company, and therefore had not acted to the prejudice of the petitioner; (2) the 12.5% of the petitioner's shareholding was based on a 10% interest in the project land, and directly linked to the 80% shareholding which the company would have in the PMA company. Since the lands were intended ultimately for the PMA company, in which the company would have an 80% share, anything that Lim did or failed to do in relation to the land and in relation to the joint venture company would directly or indirectly affect the petitioner as a shareholder of the company. It could not therefore be said that Lim's actions and omissions in relation to the land or the formation of the PMA company only affected the petitioner, if at all, in his contractual relationship with Lim on the personal level; (3) the mere fact that those in control of a company used their voting power to make decisions for the company against the wishes of the minority would not bring a case within the ambit of s 216 of the Act. The section could only be invoked when majority rule passed over into rule oppressive of the minority or in disregard of their interest. 'Disregard' meant 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; (4) on the evidence, a case of oppression and disregard as well as prejudice had been amply made out. The fact that Lim had been in breach of contractual obligations to the petitioner on the personal level did not prevent a petition under s 216 from being brought. On the contrary, it only made the case stronger. The submission that the petition had been brought for a collateral purpose, ie to assert a contractual claim unconnected with the petitioner's position as a member of the company, was accordingly rejected.

Re Kanari Resorts Pte Ltd [1995] 3 SLR 685; (1995) CSLR X[658] High Court, Singapore (Warren LH Khoo J).

Kumagai-Zenecon Construction Pte Ltd (KZ) was a joint venture company of Kumagai Gumi Co Ltd (Kumagai) and Zenecon Pte Ltd (Zenecon), the latter being controlled by one Low Hua Kin (Low). KZ was formed for the purpose of engaging in the business of building contractors and property development. At the material time, the board of KZ consisted of four Kumagai nominees and three Zenecon nominees. Kumagai Property Marketing Pte Ltd (KPM), which later changed its name to Kumagai Investment Pte Ltd, was a subsidiary of KZ. The original subscribers of KPM were his wife, Teo Yit Bee (Teo) and one Low Woon Hock. KZ was allotted 9,000 shares while one Lim Thye San, Low's brother-in-law, was allotted 1,000 shares, with the approval of Kumagai. Between 1986 and 1989, Low Woon Hock's and Lim Thye San's shares in KPM were transferred to Low. The directors of KPM were Low, Teo, Loo Yong King (Loo) and Jason Lim (Lim). There were no Kumagai nominees on KPM's board. Between 22 June and 3 July 1990, KPM entered into certain share transactions known as 'the Guthrie share transactions', whereby KPM acquired some 12.57% of Guthrie GTS Ltd (Guthrie). At about the same time, Low bought for his own account 10.5 million shares in Guthrie. Nobody from Kumagai knew about the transactions until they learnt of it from the newspapers. These shares were later sold at a profit. In early 1991, Low was told by Kumagai not to tender for any new projects. Low nevertheless submitted tenders on behalf of KZ. The tender deposits were paid out of KPM's funds. In May 1991, KPM entered into certain share transactions (the Pac Can share transactions), whereby KPM bought 7.321 million shares in Pacific Can Investments Holdings Ltd. The name of KPM was changed to Kumagai Investment Pte Ltd and the objects clause of its memorandum of association was altered to allow investment in shares. KPM also invested in KZ Investments Pte Ltd (KZ Investments), a private company originally wholly owned by Zenecon. In September 1991, KZ Investments acquired 3.117 million shares in a Malaysian company, Aokam Tin Bhd (the Aokam share transactions). Low himself bought 2.011 million shares in Aokam. These were all done without the knowledge or approval of Kumagai. On 17 September 1991, a requisition was made by Zenecon for an extraordinary general meeting of KZ to be convened for the purpose of considering the removal of a Kumagai nominee, Okazaki, as a director of KZ and to appoint Lim in his place. This move was abandoned. From December 1991 onwards, Zenecon nominee directors did not attend board meetings called by Kumagai's nominee directors. This prevented the formation of a quorum. In January 1992, KZ's solicitors were instructed to deny Kumagai's nominee directors access to certain files. On 11 February 1992, Kumagai obtained a court order appointing provisional liquidators of KZ. The provisional liquidators found that much of KZ's records were missing. While the provisional liquidators were taking over the affairs of KZ, Zenecon's shares in KZ Investments were transferred to Zenecon Holdings Pte Ltd (Z Holdings). A board resolution of KPM signed by Low, Teo, Loo and Lim authorized any two directors to sign a waiver of the pre-emptive rights in shares of KZ Investments. On 29 January 1992, Kumagai filed a petition seeking reliefs under s 216 of the Companies Act (Cap 50, 1990 Ed) (the Act) in respect of KZ. Kumagai sought, inter alia, orders that KZ and KPM be wound up; that Low, Teo, Loo and Lim be required to account either to KZ or Kumagai for any benefits acquired by them in breach of their duties to KZ; that they be required to make good any loss suffered by KZ or Kumagai; and that they be required to purchase from KPM its KZ Investments shares. Kumagai then amended its pleadings, alleging misuse of KZ's funds from 1983 to 1985. Kumagai also presented a petition for the winding up of KZ on fair and equitable grounds. The trial judge held that the share transactions and the associated changes of name and object of KPM were acts of oppression within s 216 of the Act. The shareholder agreement and the memorandum of understanding did not contemplate such investments and Kumagai should have been consulted. KPM and KZ Investments were merely vehicles by which the oppressive acts were committed. The trial judge also found that the investment by KPM in KZ Investments was prejudicial to Kumagai and solely for Low's own purpose. It also constituted minority oppression. The trial judge held that the transfer of the shares in KPM to Low was in breach of the pre-emptive provisions in the articles of KPM and were also oppressive conduct. He felt that the allegations of misuse of funds were not sufficiently particularized. He was of the view that the submission of tenders by KZ using KPM funds against Kumagai's opposition was an instance of oppressive conduct. The removal of company documents and the denial to Kumagai's nominees of access to company documents were also within the rubric of oppressive conduct. The trial judge ordered KZ and KPM to be wound up. He held that Low should be accountable for the loss suffered by KPM on the Pac Can share transactions, but was unable to hold that the other directors were liable as Kumagai had not shown sufficiently how they were involved. He ordered Low to reimburse KPM for the tender deposits paid out of KPM's funds. He also ordered Low to purchase or procure the purchase of the shares in KZ Investments held by KPM. He held that 901 out of the 1,001 shares in KPM transferred to Low in breach of the pre-emptive provisions were held by Low in trust for KZ. Zenecon was ordered to pay KZ the fair market rental of KZ's equipment used by Zenecon. No or der was made on the winding up petition. The trial judge was of the view that the proceedings had been unnecessarily enlarged and prolonged by Kumagai and awarded them only 60% of their costs. (See [1994] 3 SLR 552.) Zenecon, Low, Teo and Loo (the appellants) appealed against the decision on the petition under s 216 and Kumagai also appealed against certain parts of that decision. In addition, Zenecon and Low appealed against the decision in the companies winding-up proceedings.

Held, allowing in part the appellants' appeal with regard to the s 216 petition (CA 131/94) and dismissing Kumagai's appeal with regard to the same (CA 121/94): (1) the trial judge's findings that the 1991 share transactions entered into by KPM and the associated changes of name and objects of KPM to enable the transactions to be carried out were acts of oppression were unimpeachable; (2) the trial judge was fully entitled to come to his conclusion that the investment by KPM in KZ Investments made no commercial sense. While in the usual run of cases it was not open to the court to question the soundness of commercial decisions, the fact here remained that the return of KZ Investments filed with the Registrar of Companies in 1991 stated that the company had ceased trading and showed no profit or material assets. The effect of the transaction was to lock in a significant amount of KPM's funds in a minority holding in a private company which was practically inactive; (3) so far as the transfer of the shares in KPM to Low were concerned, the reasonable inference to be drawn from all the facts was that KZ would hold 9,000 shares and Low or his group 1,002 shares in KPM. In procuring the transfers of the shares to him, Low was in effect rearranging the holding of the 1,002 shares within his own group. Although in doing so, there was technically a breach of the pre-emptive provisions of the articles of association of KPM, such a breach in the circumstances could not be considered as oppressive conduct; (4) in submitting the tenders of KZ for the new projects, Low was carrying out what was part of the business and operations of KZ. What he did was fully legitimate business activity and Kumagai was not entitled to ask Low not to tender for any new projects in the name of KZ. This was more an instance where the two rival parties disagreed on the operations of KZ than one of oppressive conduct on the part of Low; (5) Low represented KZ in KPM and was a nominee director of KZ on the board of KPM. It was in the interests of KZ that Low should discharge his duties as director of KPM properly. Therefore, when Low was acting as a director of KPM, he was also acting as nominee of KZ. When he carried on the business of KPM, serving only the interest of Low and/or Zenecon and in disregard of the interest of KZ, he acted in breach of his duty to KZ. Such conduct on his part was also conduct in the affairs of KZ and oppressive to Kumagai as a shareholder of KZ; (6) the order the court made under s 216 must be made with a view to bringing an end to or remedying the matters complained of. The 'matters complained of' meant matters rightly complained of. Subject to this limitation, the jurisdiction to make an order under s 216 was very wide, depending largely on the matters complained of and the circumstances prevailing at the time of hearing; (7) at the time of the hearing below, provisional liquidators had been appointed over the affairs of KZ and KPM and at the conclusion of the hearing, both KZ and KPM were ordered by the trial judge to be wound up and liquidators were appointed. Such an order would have a bearing on further orders to be made. The appointment of liquidators removed the need to order a derivative action as the wrongdoers were no longer in control. But the appointment of liquidators was no bar to other reliefs, if appropriate. The orders to be made by the court were ultimately discretionary and depended on the facts of the particular case; (8) the order requiring Low to purchase or procure the purchase of KZ Investments shares acquired by KPM and the order that Zenecon pay an amount to KZ representing the fair market rental for the use of the various items of equipment were appropriate orders in the circumstances and should not be disturbed. The order that Low ought to reimburse the loss sustained by KZ resulting from the Pac Can share transactions, in principle, fell within the purview of s 216. However, the evidence before the trial judge was not sufficient to determine the cause of that loss and the quantification thereof. The order therefore ought not to have been made in the circumstances. The order that Low pay to KPM the funds used as deposits for the tenders of KZ for the new projects was also set aside; (9) Kumagai had no cause of complaint against the waiver of the pre-emptive rights to enable Zenecon's shares in KZ Investments to be registered as they had maintained that KPM should not have invested in any shares in KZ Investments, and they had sought and obtained an order for these shares to be purchased by Low; (10) there was an error in the trial judge's finding that Zenecon held 1,000 shares in KPM as Zenecon did not hold or own any shares in KPM at any time. However, as the transfers of the shares to Low were not part of the oppressive conduct, nothing turned on this error; (11)

Held, dismissing Zenecon and Low's appeal with regard to the winding-up petition (CA 130/94): (1) there was insufficient evidence before the trial judge to make any specific findings against Teo, Loo and Lim in respect of the Pac Can share transactions and the allegations of improper use of KZ funds. No order should be made against Teo, Loo and Lim. having regard to what the court had held, the trial judge was right in not making any order on the winding up petition, as he found that oppressive conduct had been established in the petition under s 216 of the Act. The appellant's appeal in respect of the winding up petition is accordingly dismissed with costs.

Kumagai Gumi Co Ltd v Zenecon Pte Ltd & Ors and other appeals [1995] 2 SLR 297; (1995) CSLR X[657] Court of Appeal, Singapore (Yong Pung How CJ, Karthigesu and LP Thean JJA).

The first respondent, Kumagai-Zenecon Construction Pte Ltd (the company) was incorporated on 3 June 1983 pursuant to a shareholders agreement (the agreement) and memorandum of understanding (the memorandum) entered into between the petitioner, Kumagai Gumi Co Ltd, and the second respondent, Zenecon Pte Ltd (Zenecon), on 25 April 1983. Under the agreement and the memorandum, Zenecon was the majority shareholder with 51% of the shareholding and responsible for the management of the company. The petitioner, with 49% shareholding, was responsible for providing finances and other forms of assistance. The agreement also provided for three nominee directors to be appointed to the Board of Directors by each joint venture shareholder. The number of Kumagai's nominee directors was, however, increased to four on 17 February 1987. Decisions of the Board of Directors were to be carried on a majority of votes and there was no provision for a second or casting vote which was, however, provided for in art 83 of the company's articles of association. There were provisions in the agreement to ensure that decisions with regard to the company's affairs could not be made without the agreement of both the petitioner and Zenecon. The third respondent, Low Hua Kin (Low), the managing director of Zenecon, was appointed the managing director while Motoo Otsuka (Otsuka), the general manager of Kumagai's overseas division in Tokyo, was appointed the chairman. In 1984, with Kumagai's approval, the seventh respondent, Kumagai Property Marketing Pte Ltd (KPM), was incorporated. The total issued capital of KPM was S$10,002 with the company holding 9,000 shares and Low's brother-in-law holding 1,000 shares. Low was appointed the company's representative to KPM. There were no Kumagai nominee directors on KPM's board of directors. On 8 March 1989, Low's brother-in-law transferred his shares in KPM to the sixth respondent, Jason Lim Cheng Tiong (Jason), the company's secretary, who then subsequently transferred them to Low. Between 22 June and 3 July 1989, Low bought, in the name of KPM, 16.7 million shares in Guthrie GTS Ltd (Guthrie) at the total cost of S$10,282,000. Low also bought, in his own name, 10.5 million shares in Guthrie so that, together with KPM's shares which comprised some 12.57% of Guthrie's issued share capital, Low commanded a voting power represented by 20.57% of Guthrie's issued share capital. These purchases were financed by loans against Low's guarantee. On 5 July 1989, Low became a director of Guthrie and, subsequently, the chief executive officer. Low then took steps to forge a business relationship between the company and Guthrie, and a memorandum of understanding for a joint venture with Guthrie was signed on 6 July 1989. Kumagai claimed that it was not informed of the above mentioned share transactions and joint venture, although Low claimed to have informed Otsuka of the same. Kumagai's nominee directors learnt of the company's purchase of shares in Guthrie and the joint venture only from the newspapers. The resolution authorizing the company's entry into the joint venture were only signed by Zenecon's nominees and were not discovered by Kumagai until 28 July 1989. As a result of these discoveries, several meetings were held in Tokyo between Low and the representatives of Kumagai during the months of July and August 1989. This culminated in an agreement whereunder, among other matters, the joint venture with Guthrie was to be proceeded with and Kumagai's nominee Norihide Kano was to be appointed Low's deputy and/or executive director of the company. Kumagai agreed to assist in providing financial facilities for the joint venture by subscribing for S$9,244,000 redeemable preference shares. Subsequently, however, instead of subscribing for the redeemable preference shares, Kumagai provided financial assistance to the company in the form of a $9m guarantee. Although Kano was appointed Low's deputy and chief executive officer of the company, he was ignored by Low. Low, after informing Kano that the shares in Guthrie should be sold but without consulting him, sold most of KPM's shares in Guthrie. Kano learnt of the sale from the newspapers. The sale of the shares in Guthrie resulted in a profit of S$6.2m . On 5 June 1991, the company executed an agreement to buy over Guthrie's rights and liabilities in the then three outstanding joint venture projects for the sum of S$300,000. Again, neither Kumagai or its representatives were informed, and the company's seal was used without the board of directors' authorization. This agreement to buy over Guthrie's rights and liabilities in the projects was said to have caused loss to the company. To inject business into the company, Low re gistered the company as a foreign company in Malaysia without consulting Kumagai. In a meeting in Tokyo, on 12 and 13 September 1990, Kumagai indicated that it desired that KPM be wound up and the profits from the sale of shares in Guthrie be distributed. Instead of doing this, on 23 April 1991, Low changed the name of KPM to Kumagai Investment Pte Ltd (KI), and from the purported authority of a resolution of a general meeting of the company held on 1 July 1991, KI's objects clause was changed to include investment in shares. Between 6 and 9 May 1991, KI purchased 7,321,000 shares in Pacific Can Investments Holdings Ltd (Pac Can), and a further 278,000 in August 1991. In the meantime, on 11 June 1991, KI and Zenecon were each allotted 1,314,525 shares in KZ Investments Pte Ltd (KZI), a company incorporated in December 1983 by Low and his wife, the fourth respondent, and in which a Taiwanese related corporation had already been admitted as a minority shareholder. This placed Low, as the representative of Zenecon and KI, in control of KZI. In September 1991, 3,117,000 shares in Aokam were bought by KZI. Again, Kumagai only knew of the purchases of shares from newspaper reports, and the various resolutions pertaining to KPM/KI after conducting searches at the Registry of Companies. In a letter to a Kumagai representative, on 11 November 1991, Low claimed for the first time that he had discussed the purchases of shares with Otsuka. Low also indicated his unhappiness with, among others, Kumagai's failure to subscribe for the redeemable preference shares in the company and the appointment of Kano as his deputy. Low contended that the petitions were motivated by Kumagai's ulterior intention of withdrawing from the region and to this end had schemed to choke off potential business for the company and encroached on Low's management of the co other irregularities. When the company resolved not to take over a project, Zenecon made use of company's equipment to carry on the project. To circumvent Kano's directive that the company shouldnot tender for any projects, Low used KI's funds to tender and KI then billed the company, subsequently. Kumagai also alleged that S$2m was improperly transferred to Zenecon. Low alleged that these were inter-company loans. Kumagai also complained that Zenecon attempted to obtain from the boar d a resolution to remove one of Kumagai's nominee, and that Zenecon nominees failed to attend board meetings called by Kano to discuss company affairs. When the latter two actions occurred, the relationship between Kumagai and Zenecon had deteriorated.

Held, granting the petition: (1) Low's explanation that Otsuka had approved the purchases were not believable because, firstly, it was inconceivable that if Otsuka had given approval for the Guthrie share purchase and joint venture, he should have kept this from his subordinates even after the matter had become public knowledge and there was a need for them to know. Secondly, Low brought up Otsuka's approval very late and not in earlier explanations given by him for the purchase. Thirdly, Otsuka was at the meeting when Kumagai decided that the profit from the sale of shares in Guthrie should be distributed and was unlikely to approve any further share transactions. Finally, it was unlikely that Otsuka, being a rational man of business, would have agreed to use KPM which did not have a single Kumagai nominee, as a vehicle to carry on the ventures which might have exposed Kumagai to loss; (2) the share purchases and the associated changes of name and objects of the companies to enable the purchase of the shares were acts of oppression which alone were sufficient to found a claim for relief under s 216 of the Companies Act (Cap 50, 1990 Ed). The agreement and memorandum of understanding clearly did not contemplate investment in shares. Any change of direction required Kumagai's agreement in accordance with the machinery for deciding business policy provided by the agreement. The transactions were a serious breach of the letter and spirit of the joint venture between Zenecon and Kumagai. The fact that Kumagai nominees had to find out about the share transactions from the newspapers was an affront to reasonable standards of behaviour between business partners. The investments in KZI and Pac Can were against the commercial interest of KI and only served Low's purpose. The fact that Kumagai ratified the transaction in Guthrie did not make the act any less oppressive, but was essentially an acceptance of a fait accompli; (3) Low's dissatisfaction with certain of Kumagai's action such as its failure to subscribe for redeemable preference shares and its appointment of Kano as a deputy for Low was not justification for the oppressive acts. Kumagai was justified in seeking to impose a tighter control over the operations of the company; (4) Low's contention that the petitions were motivated by Kumagai's desire to withdraw from the region was not accepted. It would not be necessary for Kumagai to resort to the oppression proceedings to achieve the said result; (5) only Low was responsible for the share transactions as acknowledged by him in affidavits filed. As there was a lack of particularization in the petitions with regard to the involvement of the other directors, they could not be held responsible. The mere fact that a person is a director of a company does not lead to the conclusion that he is to be held accountable for all its wrongful acts. Some involvement in an objectionable act must be shown; (6) as there was insufficient evidence that the sum of S$2m had been improperly transferred to Zenecon, the allegation was not made out. Similarly, Kumagai's complain that Zenecon attempted to obtain from the board a resolution to remove one of Kumagai's nominee, and that Zenecon nominees failed to attend board meetings called by Kano to discuss company affairs did not amount to acts of oppression, as, firstly, Kumagai had been invited to pass the resolution. Furthermore, when Kumagai refused, the resolution was not pushed through. The fact that, when the latter two actions occurred, the relationship between Kumagai and Zenecon had deteriorated was also an explanation; (7) in view of the above, the following reliefs were ordered. First, it was ordered that both the company and KI be wound up and the liquidators nominated by Kumagai be appointed as such. Second, as the provisional liquidator's report showed that the unauthorized purchase of shares in Pac Can resulted in a loss of S$2,982,517.17, Low should reimburse KI this amount by way of compensation. Third, as it was almost impossible for KI to sell its interest in KZI shares because it was only a minority holding, Low was ordered to purchase the shares at a fair price to be fixed by independent valuers or at the cost of the purchase, whichever was the higher. Fourth, the transfer of the 1,000 shares in KPM in breach of the rights of pre-emption was to be remedied by declaring that Low held 901 of the 1001 shares transferred in trust for the company. Fifthly, all the tender deposits paid less what had been refunded to the company should be charged against Low; (8) Kumagai was entitled to the costs of both petitions but those which were incurred in common should only be charged once. However, as the proceedings had been unnecessarily enlarged because of meticulous presentation of peripheral matters, Kumagai was awarded only 60% of the costs, of which 95% was to be borne by Low and 5% by Jason.

Re Kumagai-Zenecon Construction Pte Ltd; Kumagai Gumi Co Ltd v Kumagai-Zenecon Construction Pte Ltd & Or [1994] 3 SLR 552; CSLR X[652] High Court, Singapore (Warren LH Khoo J).

[Annotation: Reversed in part on appeal. See [1995] 2 SLR 297.]

The respondent company applied for orders, inter alia, to strike out the petitioner's originating petition on the grounds that the said petition disclosed no reasonable cause of action, or otherwise, was an abuse of the process of the court. The petitioner was a minority shareholder and one of the four directors of the respondent company. The complaint of the petitioner was basically that the resolutions which the respondent company had proposed to pass at an EGM were contrary to the interests of the respondent company itself. The said resolutions, if passed, would necessitate the respondent company to distribute 'a dividend in specie' in respect of its entire shareholding of the shares of another company, as well as to dispose of its real property in respect of a piece of land. The petitioner sought, inter alia, the appropriate remedies under s 181 of the Companies Act 1965 ('the Act').

Held, allowing the respondent company's application: (1) on the issue as to whether the petitioner's originating petition disclosed a reasonable cause of action, it was incumbent upon the court to consider the said petition and decide if it did, and the respondent company could not rely on any affidavit evidence in such a situation; (2) before a petitioner may seek the remedies and reliefs specified under s 181(2) of the Act, he has, firstly, to bring himself within either one of the two limbs of s 181(1) of the Act so as to be able to complain of oppression or unfair discrimination or of being otherwise prejudiced; (3) the proposed resolutions would affect all the shareholders of the respondent company collectively. The petitioner was not being isolated and singled out for oppression or discrimination or any prejudicial treatment which could trigger off the protective mechanism in s 181(1) of the Act; (4) the situation in the instant case was one which came within the general rule in Foss v Harbottle (1843) 2 Hare 461 which advocates that where the interests of a company are involved as a whole, it is the company itself which should be concerned, and that concern may be expressed through the will of the shareholders at a general meeting.

Re Tong Eng Sdn Bhd (Loh Loon Keng, Petitioner) [1994] 1 MLJ 451; CSLR X[647] High Court, Penang (Selventhiranathan JC).

The respondent, See, was a minority shareholder in Asahi Metal Pte Ltd (Asahi Metal). He presented a petition for relief under s 216 of the Companies Act (Cap 50, 1994 Ed) on the grounds of oppression or injustice committed by the majority shareholders, Gan and Foo, in the conduct of the affairs of Asahi Metal. The trial judge found against See on three out of the four grounds on which the petition was grounded. The last ground was that cash purchase of certain pewter alloy by Asahi Metal in 1989, from an Indonesian company, Tasma, was fictional and that Gan and Foo had spirited away the S$446,243 allegedly paid for the pewter alloy. On this point, the trial judge held that he was not satisfied that Asahi Metal had in fact purchased the pewter alloy and made the payments. The petition was, therefore, granted. Gan and Foo were ordered to purchase See's shares at a price to be determined by an independent auditor, factoring in the sum found improperly paid. Gan, Foo and Asahi Metal appealed.

Held, allowing the appeal: (1) it seemed that the judge had placed the legal burden of proving the purchase of the pewter alloy on Gan and Foo. This was not right as See was making a downright and positive allegation that no pewter alloy was purchased by Asahi Metal from Tasma in 1989 and that the moneys withdrawn from Asahi Metal's bank account allegedly to pay for the pewter alloy were diverted to the use of Gan and Foo. The legal burden was on See to prove this, albeit on a balance of probabilities; (2) the allegations made by See against Gan and Foo were extremely serious in that, at least, a charge of dishonesty, if not theft, was being made against them. It was axiomatic that the more serious the nature of the allegations, the higher the standard of proof necessary to make good these allegations; (3) on the evidence, the probabilities were that the purchase of the pewter alloy from Tasma for S$446,243 was not fictitious. In view of the outright allegation of dishonesty made by See the standard of proof required ought to have been commensurate with the seriousness of the allegation. See had not discharged this burden of proof. Since oppression or injustice had not been proved, See's application for relief under s 216 failed.

Gan Cheong Or & Ors v See Soon Lee [1996] 2 SLR 9; (1996) CSLR X[666] Court of Appeal, Singapore (Yong Pung How CJ, Karthigesu and LP Thean JJA).

In 1989, the appellant (Lim), the respondent (Teoh), and two others, Hussey and Bjorn, wanted to develop a resort in Manado. They acquired land for the project, with funds from Hussey, Bjorn and the appellant. Teoh's role was to contribute his expertise as an architect. In 1993, the Gunung Kanari Shareholders Agreement was signed, providing for the setting up of a British Virgin Islands company (BVI company). Land would be acquired and vested in an Indonesian company (the PT company) which would enter into a joint venture with the BVI company to form a joint venture company (the PMA company). The PMA company would acquire land from the PT company for S$2m and the issue by the PMA company of 20% of its issued shares to the PT company. The remaining 80% of the shares would be held by the BVI company. Teoh would have a 12.5% stake in the BVI company, whilst Lim would have 37.5% and Hussey and Bjorn each would have a 25% stake. Teoh was only required to pay for his share after the fifth year of operation of the resort. Meanwhile, he was accorded the rights of a shareholder and director of the BVI company, and was to be remunerated for his services as the project architect. Soon after, Hussey and Bjorn withdrew from the venture. Lim needed to find investors quickly as he had to repay those whom he had borrowed money from for the project. He also needed more money to purchase additional land and to meet other project expenses. On 14 June 1993, Lim and Teoh entered into a loan agreement with Gary Tan. Tan would advance S$500,000 as a loan, interest-free, with a view to becoming an equity partner later on. Under the agreement, Lim and Teoh would, through their nominees, PT Eresindo, acquire 150 hectares of land in Manado. The corporate structure in the loan agreement was similar to that in the shareholders agreement, except that the BVI company was replaced by a Singapore company, Kanari Resorts Pte Ltd, which was the subject matter of this case. The PMA company was to be incorporated by 15 January 1994, failing which the loan would be repayable to Tan. Lim was liable to repay the entire loan but Teoh was only liable to the extent of 10% of the loan. Kanari Resorts Pte Ltd (the company) was incorporated on 8 July 1993 with Lim holding 49,997 shares, and Teoh, Tan and one Patrick Ng holding one share each. The four of them were also directors of the company. The company also entered into an agreement to pay Teoh a fee for his architectural services. With the withdrawal of Bjorn and Hussey, Lim took over completely the financing of the project. On 21 August 1993, the Kanari Project Funding Agreement was signed by Teoh and Lim. The agreement provided that 158 hectares of land had been acquired for S$3m and that Lim owned 90% and Teoh 10% of the land. Lim was the beneficial owner of 87.5% of the issued shares of the company and Teoh was the beneficial owner of 12.5%. Teoh's 10% share in the land would be worth S$300,000, which he would repay by either divesting 2.5% of his shares to Tan or as an interest-free loan to be repaid within five years from the commencement of operation of the dive resort. By January 1994, Tan decided not to take an equity share in the company. Meanwhile the PMA company had not been incorporated. Tan granted an extension of time to Lim and Teoh to repay the loan. Lim subsequently repaid the loan to Tan. The matter of finding investors became very urgent and both Teoh and Lim decided to look for potential investors to buy their shares or interest in the project. Meanwhile, Lim offered to buy out Teoh's share for S$325,000. Teoh refused as he felt that his share was worth much more and demanded the transfer of 6,249 out of the 49,997 shares of the company held by Lim, which he was entitled to under the Funding Agreement. Teoh then took out a petition under s 216 of the Companies Act (Cap 50, 1994 Ed) (the Act) alleging acts of oppression by Lim in the conduct of the company's affairs. In particular, it was alleged that Lim had deliberately excluded Teoh from the management of the company and refused to reflect his 12.5% interest in the company's register. Moreover, Lim had acted in a manner and with the intention of compelling Teoh to sell his shares at an undervalue. The trial judge found that the acts of oppression had been made out on two grounds, namely, denial of information and documents, and the refusal to recognise Teoh's 12.5% interest in the company. As such he ordered that Lim purchase Teoh's shares in the company at a price to be agreed or failing agreement, to be determined by the court. Lim appealed.

Held, allowing the appeal: (1) the company was intended to be a holding company, to hold 80% of the shares of the PMA company which in turn would hold the Manado land and undertake the development of the project. There was hardly any 'management' of the company in any real sense. Thus, any allegations that Lim deliberately excluded Teoh from the management of the company and that Lim had made major decisions for the company without discussions with Teoh were clearly unfounded; (2) to date, the PMA company had not been incorporated and the acquired land thus remained in the hands of nominees to the extent that Lim had a 90% and Teoh a 10% interest. The company had no claim to the land at law or in equity. Moreover, the state of the land and the project was not something unknown to Teoh, who was the architect. He knew who the nominees were, the various stages of the acquisition of the land, as well as its potential and value; (3) in any event, Teoh was a part owner of the land and the project and it was equally open to him to find out the precise position relating to it. There was nothing to prevent him from obtaining information from the nominees and Lim had not done anything to prevent the nominees from providing him with such information. As such there was no deliberate denial by Lim of any information of the land to Teoh; (4) Lim bore the entire burden of providing funds for the project, and had much more at stake than Teoh, and it would be unreasonable to expect that whilst he was negotiating with any potential buyers, he should keep Teoh informed of every one of these negotiations, none of which however had led to any fruition; (5) although Teoh was the beneficial owner of 12.5% of the shares, he had not paid Lim for them and the latter was fully entitled to hold the shares in his own name as security. It was not provided in any agreement that Teoh was entitled to the legal title of 12.5% of the shares in the company. In any event, such a claim could not found a case of oppression under s 216 of the Act as it had nothing to do with the conduct of the affairs of the company. Nor was Lim's refusal to transfer the shares an act carried out by him in exercise of his powers as a director of the company; (6) s 195(4) of the Act provided that no notice of trust was to be entered on the register of the company and the company was not to be affected with any notice of trust. Thus Teoh could not insist that the director's report and the statement of directors in respect of the audited accounts reflect his beneficial interest in the company.

Lim Cheng Huat Raymond v Teoh Siang Teik [1996] 3 SLR 605; (1996) CSLR X[669] Court of Appeal, Singapore (M Karthigesu and LP Thean JJA, Goh Joon Seng J).

R were the directors and majority shareholders in GHC. P were minority shareholders collect-ively holding 41% of the company's shares. P petitioned for relief under s 216 of the Companies Act (Cap 50) on the ground that they were being treated unfairly. They complained, inter alia, of the fact that no dividends had been paid for several years, while R drew substantial amounts from GHC in the form of salaries and directors' fees. It was also alleged that R persistently refused to give information to them regarding the recoverability of substantial debts that had been qualified by the company's auditors. When they had asked to see the accounting records, they were told that only P4 (who was a director at the time) could do so. Since P4 was illiterate, this was not feasible. P4 was subsequently removed from the board at the following AGM, despite being a director from the incorp-oration of the company. P's subsequent attempt at reconciliation and their request for board representation were rebuffed. P thereupon commenced the present proceedings. After the petition was filed, it transpired that the qualified debts were irrecoverable and were written off, largely eliminating the company's accumulated profits. P sought an order requiring R to buy them out. Alternatively, liquidation of the company was prayed for.

Held, granting the petition and ordering the company to be wound up: (1) an examination of the company's accounts revealed that the accumulated profits of the company from 1984 (when the last dividend was paid) exceeded S$2m. R drew salaries and directors' fees while P (with the exception of P4, who got directors' fees until her removal) got nothing. It is grossly inequitable that the majority shareholders should make use of their controlling power in both the general meeting and the board to adopt a policy which only benefitted themselves and gave hardly any benefit to the minority shareholders; (2) the benefits that R had obtained from the company from 1984 onwards were out of all proportion to the benefits which P had gained. The non-payment of dividends under the circumstances amounted to oppression of the minority and disregard of their interests within the meaning of s 216; (3) P were entitled to proper board representation as shareholders of more than 40% of the issued share capital of the company, especially when confidence in the competence of R to manage had been put in doubt following the qualification of the accounts by the auditors. The use of R's power to remove P4 as a director was to stop P from seeing the accounts. The refusal to give P board representation was another ground justifying relief under s 216; (4) as R had indicated that they were not in a position to purchase P's shares, it was ordered that the company be wound up.

Re Gee Hoe Chan Trading Co Pte Ltd [1991] SLR 837 High Court, Singapore (Chao Hick Tin J).

In this case, the facts showed that the directors of the company had neglected the tea plantation belonging to the company and, because of failure to pay the quit rent, there was the danger of the land being forfeited to the state. The minority shareholders applied under s 181(1)(a) of the Companies Act 1965 (Act 125) and obtained an order that the respondent-company do accept a written offer for the purchase of the tea estate in the event of the respondent-company failing to enter into the written sale and purchase agreement, the senior assistant registrar be authorized to enter into such agreement on behalf of the respondent-company. The respondent-company thereupon applied that the order be set aside and that the notice of motion be struck off.

Held: (1) in view of the indifferent attitude of the board of directors and the company in allowing the tea plantation to deteriorate from a profitable concern to one of near insolvency, together with their conduct in allowing the tea plantation to be in arrears of quit rent to such an extent that the land has almost forfeited to the state, it was clearly established that the affairs of the company were being conducted in an oppressive manner; (2) the applicants' application came within the ambit of s 181(1)(a) of the Companies Act and having regard to the wide powers given to the court under s 181(1)(b) the orders made were fair and reasonable having regard to the circumstances of the case; (3) the application under s 181 was rightly made by motion under O 52 of the Rules of the Supreme Court 1957.

Ng Chee Keong v Ng Teong Kiat Highlands Plantations Ltd [1980] 1 MLJ 45 High Court, Kuala Lumpur (Mohamed Azmi J).

In this case the appellant took out a petition under s 181 of the Companies Act 1965 (Act 125) as a shareholder of a company and alleged mismanagement, misappropriation of company funds, fraud, embezzlement and general disregard for the rules of the company. The Judicial Commissioner who heard the application dismissed it on the ground that it had no real merits. He found that there was no ground to order the company to be wound up and he also found no evidence of fraud or oppression. The appellant appealed and relied on two grounds. First he contended that the learned Judicial Commissioner was wrong to deny him the adjournment he asked for and second he contended that the learned Judicial Commissioner was wrong to dismiss the petition on the merits.

Held: (1) this was not really a case of refusing an application for adjournment but a case of refusing to further adjourn after a number of adjournments granted previously. In this case the learned Judicial Commissioner exercised his discretion correctly in refusing a further adjournment after all the previous adjournments; (2) on the evidence before him it was little surprise that the learned Judicial Commissioner found no merit in the petition.

Lee Ah Tee v Ong Tiow Pheng & Ors [1984] 1 MLJ 107 Federal Court, Johore Bahru (Wan Suleiman, Mohamed Azmi and Hashim Yeop A Sani FJJ).

Kumagai Gumi Co Ltd v Zenecon-Kumagai Sdn Bhd & Ors and another application [1994] 2 MLJ 789; CSLR X[651] High Court, Kuala Lumpur (Anuar J).

The respondent company was incorporated in 1959. Its present authorized share capital is RM20,000,000, divided into 200,000 shares of RM100 each. Its paid-up capital is RM14,000,000. The petitioner holds 880 shares out of the 140,000 issued and paid-up shares. The respondent company was the owner of three pieces of land situated in the mukim of Senai/Kulai, in the state of Johor, namely, lot 1955, lot 1033 and lot 2604. In 1991, the respondent company sold the said lot 1033, lot 2604 and a part of lot 1955 measuring 173.6 acres, which totalled 506 acres ('the three lots') to Wangsa Idaman Sdn Bhd, a company substantially owned by one Mustapha Buang. The respondent company was thus left with the remaining part of lot 1955 measuring 221.9 acres ('the said land'), which was subsequently issued with a title known as Geran No 40117 lot 27728. Sometime in 1992, Toh Boon Chui ('TBC'), a director of the respondent company, informed the members, including the petitioner, that Mustapha Buang was in a position to apply to the state authority for a change of the category of land use from 'agriculture' to 'building' and 'industry' and for subdivision of the said land. In return, it was agreed that the respondent company would acquire a company called Lembaran Murni Sdn Bhd ('LMSB') which would purchase the said land and consequently issue 40% of its shares to Mustapha Buang and his nominee and the remaining 60% to the nominees of the respondent company. On 15 December 1992, in consideration of RM50,000, the respondent company granted an option to LMSB to purchase the said land at the price of RM60,000 per acre amounting to RM13,314,000. On 17 December 1992, the respondent company passed a resolution to sell the said land to LMSB at the said price of RM13,314,000. In December 1992, Mustapha Buang and his nominee ('the first party') and five nominees of the respondent company ('the second party') entered into an agreement ('the shareholders agreement') to jointly develop the said land and to jointly incorporate or acquire a company for that purpose. The shareholding was for the first party 40% and the second party 60%. Under the shareholders agreement, the first party undertook to apply for a change of the category of use of the said land from 'agriculture' to 'industry' and 'commercial' and for subdivision. On signing the shareholders agreement, the respondent company executed a power of attorney appointing LMSB as its attorney to prepare, sign and submit the necessary applications to the relevant authorities for the necessary approvals. At a meeting of the respondent company on 5 March 1993, TBC informed the meeting that Mustapha Buang had told him that the approval for the 'conversion' of the said land had been obtained and that he was waiting for approvals for the layout plan and the subdivision. On 6 December 1993, the respondent company entered into an agreement with LMSB to sell the said land to the latter at the said price of RM13,314,000 ('the sale and purchase agreement'). However, at an extraordinary general meeting ('EGM') of the respondent company held on 22 August 1994 it was resolved that the sale and purchase agreement of 6 December 1993 be rescinded. On 30 October 1994, however, the respondent companty issued a notice informing its members that an EGM would be held on 14 November 1994 to pass a resolution to revive the rescinded sale and purchase agreement. Prior to the EGM, by a letter dated 7 November 1994 addressed to all the members of the respondent company, the petitioner informed them that the current market value of the said land was RM34,300,000 and that it was irrational for the respondent company to sell it at RM13,314,000 as agreed earlier. In another letter to all the members dated 12 November 1994, the petitioner informed them that they had been supplied with misleading facts with regard to the whole transaction. At the EGM held on 14 November 1994, a resolution was passed by the majority shareholders to revive the rescinded sale and purchase agreement, despite the petitioner's objection. On 13 December 1994 the petitioner, as a minority shareholder, filed this petition claiming that: (1) TBC had misled the members into believing that Mustapha Buang had obtained the necessary approvals whereas the authorities had granted approval for surrender and realienation of the said land to Wangsa Idaman Sdn Bhd on 22 October 1992 but this fact was withheld from the members; (2) the directors had misled the members with regard to the shareholders agreement dated 12 December 1992 as by then, the authorities had approved the surrender and realienation of the said land; (3) the directors had misled the members into believing that if the sale and purchase agreement were not revived, the respondent company would be sued by Mustapha Buang and LMSB and that there was a possibility that the government would acquire the said land or that its 'conversion' might be cancelled; and (4) the sale of the said land at the price of RM13,314,000 by the respondent company was irrational and had caused a dilution in value of the petitioner's shareholdings. The petitioner sought principally to set aside the resolution reviving the rescinded sale and purchase agreement and the agreement itself; and an order that the respondent company purchase his shares and those of any minority shareholder of the respondent company. The respondent company resisted the petition. On behalf of the respondent company, TBC stated that the petitioner failed to disclose that he was a director of the respondent company from 1968 to 1983 and that he was its chief executive from 1985 till June 1994 when he was removed. As chief executive, the petitioner was privy to every action of the respondent company. TBC contended that the petitioner's non-election as a director of Kian Hong Holdings Pte Ltd, a major shareholder of the respondent company; and his termination as the chief executive were his real grievances. TBC contended that the final approval for the surrender and re-alienationof the said land was given by the state authority on 10 March 1994, as evidenced by the letter of that date from the State Director for Lands and Mines. The main issue before the court was whether the petitioner had brought himself within the scope of s 181 of the Companies Act 1965 ('the Act').

Held, dismissing the petition with costs: (1) for the petitioner to succeed in his application for the said reliefs, he must show that it was the affairs of the respondent company which were being conducted in an oppressive manner, and that the respondent company had oppressed the minority shareholders, including the petitioner; (2) the circumstances forwarded by both parties did not even disclose that there was a difference in opinion as to the management of the respondent company between the petitioner and its directors. The circumstances only disclosed that something was amiss in the relationship between the petitioner and some of the directors, especially TBC, which was then aggravated by the non-election of the petitioner to the board of Kian Hong Holdings Pte Ltd and the termination of his employment as chief executive; (3) on the whole, the circumstances and matters complained of by the petitioner did not at all denote that there was oppression within the meaning of s 181(1) of the Act. There was nothing to show that the respondent company's action complained of was designed to injure the petitioner in his rights as a member. The petitioner had failed to prove that the directors had acted in disregard of his interest. There was nothing to suggest that the respondent company was not being conducted efficiently by the existing board of directors in the interests of the members, neither was there any violation of the conditions of fair play or any abuse of power being committed by the directors of the respondent company which could amount to oppression. The revival of the rescinded sale and purchase agreement, which was objected to by the petitioner and another minority shareholder, could not amount to oppression when the resolution was passed by a majority of the members. Oppression must be in the form of dishonesty and in the instant case, there was none. The petitioner had also failed to satisfy the court that the resolution to revive the rescinded agreement was not bona fide for the benefit of the respondent company as a whole; (4) the petitioner's contention that no approval was obtained by Mustapha Buang or LMSB could not be looked at in isolation but other events had to be taken into consideration. The approval for surrender and re-alienation obtained by Wangsa Idaman would fulfill Mustapha Buang's obligation under the shareholders agreement. Final approval was eventually obtained on 10 March 1994; (5) he who alleges fraud must clearly and distinctly prove it, and a general allegation of fraud is insufficient. Fraud must be proved beyond reasonable doubt and cannot be based on suspicion and conjecture. The petitioner had failed to forward sufficient particulars of fraud. If there were any, there was a general vagueness in the evidence relating to the alleged fraud; (6) the directors of the respondent company had not misled the members into reviving the sale and purchase agreement. The petitioner was privy to the whole transaction from day one, ie from the day the three lots were sold to Wangsa Idaman Sdn Bhd, and the negotiations and agreements which ensued after TBC informed the respondent company that Mustapha Buang was in a position to get the said land 'converted' and subdivided for the purpose of developing it into an industrial estate right up to the removal of the petitioner as chief executive of the respondent company. He was a member of both the respondent company and LMSB and there was evidence to show that he was aware of the arrangement made between the respondent company and Mustapha Buang who was using Wangsa Idaman Sdn Bhd as a vehicle for the 'conversion' and subdivision of the said land. His contention that the approval was only with regard to surrender and re-alienation and not by way of 'conversion' and subdivision had no bearing upon his complaint at all as the end result was the same, ie the state government had agreed to the surrender and re-alienation of the said land in the form of several units with the category of land use of 'building' and 'industry'. The approval was, however, subject to several conditions and there was always the possibility of its cancellation. It could not be said that the directors had deliberately capitalized on that possibility to induce the members to agree to the revival of the sale and purchase agreement; (7) the resolution to revive the rescinded sale and purchase agreement was passed by the majority at the EGM. Unless fraud was established, it was not the duty of the courts to inquire into its rationality.

Dato' Toh Kian Chuan v Swee Construction and Transport Company (Malaya) Sdn Bhd [1996] 1 MLJ 730; (1996) CSLR X[665] High Court, Johor Bahru (Mohd Ghazali J).

Kumagai Gumi Co Ltd v Zenecon-Kumagai Sdn Bhd & Ors and another application [1994] 2 MLJ 789; CSLR X[651] High Court, Kuala Lumpur (Anuar J).

In this case an application was made for amendment of a petition under s 181 of the Companies Act 1965 (Act 125), for remedies on the grounds of oppression of minorities. The application was opposed on the ground that the provision for amendment or withdrawal of a petition in s 221(2)(e) of the Companies Act 1965 applied only to petitions for winding up.

Held: (1) the discretion under s 221(2)(e) of the Act to allow for amendments or for withdrawal with liberty to file a fresh petition cannot be extended to a petition under s 181 and the Companies (Winding-up) Rules 1946, did not apply; (2) by virtue of O 53B r 3, the Rules of the Supreme Court 1957 are applicable and the discretion of the court under the rules are available to the applicant.

Re United Iron Mining Co Ltd [1970] 1 MLJ 105 High Court, Ipoh (Chang Min Tat J).

The first petitioner was the wife of the first respondent. The second to the sixth petitioners were their children. They were shareholders and directors of various family companies. Due to certain disputes, the petitioners filed a petition under s 181 of the Companies Act 1965 ('the Act'). After being served with the petition, the first respondent took out a summons in chambers pursuant to O 18 r 19 of the Rules of the High Court 1980 ('RHC'), inter alia, to strike out the pleadings in the petition, in particular sub-paras 17.11 and 17.31. The allegations in sub-para 17.11 were that the first respondent threatened a car park attendant with a gun, took control of the car park and the collections belonging to the company, and refused to account for the money to the prejudice of the shareholders. The allegation in sub-para 17.31 was that the first respondent threatened to blow up the fourth respondent company's premises. The first respondent relied on O 18 r 19(1)(b) and (c), and averred that: (i) allegations about a person's character were not relevant in a petition under s 181; and (ii) the allegations as stated in the paragraphs were intended to give a bad image of him by showing him as being crazy and violent and with an intention of tarnishing his good name. The first respondent also asked the High Court to strike out pleadings in respect of the seventh respondent as it was a duplicity. It was averred that the orders sought were issues in other proceedings, and that the matter before another High Court judge in which the present seventh respondent was the seventh plaintiff had not been resolved. However, with regard to the pleadings relating to the seventh respondent, it was only in the affidavit that the first respondent specifically referred to prayers (k) and (l) in the petition to be struck out.

Held, dismissing the summons: (1) sub-paras 17.11 and 17.31 were averments of the conduct of the first respondent who was a shareholder and director of the fourth respondent. If these acts were done, they could be considered as being done with total disregard of the petitioners' interest. Such conduct if done or said was sufficient ground to present a petition under s 181 of the Act; (2) the pertinent question was whether the affairs of the company were conducted or were attributable to an act or omission on the part of the company and not from the acts of a shareholder carried out in personal capacity outside the course of a company business. A course of conduct by a shareholder which was damaging to the company, if called to the company's attention, the company would probably have been able to rectify, was conduct in the affairs of the company and oppressive; (3) allegations of dishonesty and outrageous conduct were not scandalous if relevant to the issue and would be admissible in evidence to show the truth of any allegation that is material to the relief sought; (4) if a party wishes the court to strike out or expunge or amend any passage or paragraph in the pleadings before the court, then it is the duty of the party seeking the court's indulgence to so act to place before the court in clear, unambiguous terms the exact requirement, namely whether to strike out or expunge or amend, and to clearly spell out the exact words or passage or lines in the pleadings. Most of the paragraphs in the petition referred to the seventh respon-dent. Such a wide application was vague and ambiguous, and ought to be struck out for uncertainty and lack of precision; (5) However, it was only in the affidavit that the first respondent specifically referred to prayers (k) and (l) in the petition to be struck out. An affidavit is to support the application and not vice versa. The court must not be put in a position to circumspect an application.

Dr Leela Ratos & Ors v Anthony Ratos s/o Domingos Ratos & Ors [1996] 3 MLJ 167; (1996) CSLR X[668] High Court, Kuala Lumpur (Kamalanathan Ratnam JC).

Re Senson Auto Supplies Sdn Bhd [1988] 1 MLJ 326 High Court, Penang (Edgar Joseph Jr J).

The petitioner claimed that a scheme of arrangement formulated by the second and third respondents to enable the fourth respondent (in receivership) to reduce its financial burden and strengthen its financial position was oppressive to him and sought the court's aid to prohibit the fourth respondent from proceeding with the scheme. The petitioner was not a member or shareholder of the fourth respondent. However, he claimed connection with the fourth respondent by virtue of the fact that he was a shareholder of the first and fifth respondents who in turn were the secured creditor and shareholder respectively of the fourth respondent. The fourth respondent contended that the petitioner had no locus standi under s 181 and s 218(1)(f) and (i) of the Companies Act 1965.

Held, allowing the application: if indeed the petitioner would suffer loss by reason of the first and fifth respondents adopting the scheme to his detriment, then he should turn to the first and fifth respondents for such loss but as against the fourth respondent, he had no cause of action whatsoever nor could he claim that he had been oppressed under s 181 of the Act by a scheme of arrangement proposed by the fourth respondent when he was not even a member or a shareholder of the fourth respondent.

Verghese Mathai v Telok Plantations Sdn Bhd & Ors [1988] 3 MLJ 216 High Court, Kuala Lumpur (Siti Norma Yaakob J).

In this application under s 181 of the Companies Act 1965, on a preliminary objection it was contended that the proceedings should not have been commenced by originating petition but originating motion. Held: (1) s 181 of the Companies Act 1965 (Act 125) dealt with remedies in cases of oppression of shareholders by the directors of a company. By its very nature, it is contentious and such an application seeking remedies should set out the acts of oppression complained of. This could be achieved if the originating petition procedure was used; (2) the correct procedure to commence an application under s 181 was by petition and accordingly the proceedings herein were properly commenced.

Re Lee Mah Realty Sdn Bhd; Song Kueng Poh v Liew Chock Sang & Ors [1980] 1 MLJ 115 High Court, Kuala Lumpur (Harun J).

In this case, the respondent had brought an originating petition relating to a company (the third appellant) in which she and the first and second appellants were the directors. The respondent complained that the first and second appellants 'have wantonly and discriminately conducted the affairs of the company in a manner burdensome, harsh, wrongful and oppressive to the petitioner in utter disregard to her rights and interests as a shareholder'. The respondent/petitioner filed a summons for directions and an order in terms was made. The appellants appealed and at the appeal relied on three grounds of appeal: (a) the learned judge erred in allowing the petition to be amended by adding the third appellant as a party; (b) the learned judge erred in law in making a substantive order, that is, in directing that certain moneys due to the company be paid into court; (c) the learned judge erred in directing that (i) the statements in the affidavit of the respondent/petitioner be admissible in evidence at the trial without calling as a witness the maker of the statements and (ii) the evidence of certain facts be received at the trial by statements on oath of information and belief.

Held: (1) the order made by the learned judge and which was complained of was an order on a substantive matter under one of the prayers in the original petition and should not have been made at the hearing of the summons for directions brought under O 88 or O 25 of the Rules of the High Court 1980. The matter should be considered at the trial and should be deleted from the order; (2) it is up to the respondent/petitioner whether to give oral evidence at the trial or not but the appellants, at the hearing of the petition, should not be prevented from cross-examining her on her statements in the affidavit. The order made should be read subject to the right of the appellants to cross-examine; (3) the respondent/petitioner has to prove the facts in accordance with the law of evidence and hearsay evidence is inadmissible. The direction allowing such hearsay evidence must therefore be deleted from the order.

Haji P Shaukat Ali bin Ghani & Ors v Lee Kheng Gnoh [1988] 2 MLJ 237 Supreme Court, Kuala Lumpur (Lee Hun Hoe CJ (Borneo).

P presented a petition under s 216 of the Companies Act (Cap 50). In this petition they sought, inter alia, the winding up of the company. The proceedings were commenced as winding up proceedings under the Companies (Winding-Up) Rules 1969 and the petition was advertised as a winding up petition. The company applied to have proceedings struck out on the ground that they were not winding up proceedings.

Held, allowing the application: (1) proceedings for relief under s 216 of the Companies Act are not winding up proceedings even if one of the reliefs sought is the winding up of the company. The underlying object of s 216 is not the liquidation of the company but to end the acts of oppression against the minority shareholders. A petitioner who seeks to wind up a company on the ground of oppression whether as the principal or only relief is not entitled to such an order even where he proves his case; (2) the presentation of a petition for relief under s 216 does not commence winding up proceedings even if winding up is ordered. The winding up commences from the date of the making of the order, not the date of the petition; (3) accordingly, the petition should not have been presented as a winding-up petition. It should have been presented as an originating petition under O 88 of the Rules of the Supreme Court 1970; (4) the petition could not be amended so as to come within the RSC. The RSC and the Companies (Winding-Up) Rules 1969 are mutually exclusive in their operational effect. The petition was struck out with costs.

Re Chong Lee Leong Seng Co (Pte) Ltd [1989] SLR 685 High Court, Singapore (Chan Sek Keong J).

[Annotation: Reversed on appeal. See [1991] SLR 122; [1991] 2 MLJ 129.]

In this case, the originating petition was scheduled to be heard on 31 July 1995. Counsel for the respondents raised a preliminary objection that the petition should be struck out as it did not comply with the Companies Winding-Up Rules 1972 since the copy of the petition annexed to the affidavit verifying the petition was not that of the petition filed in court and the affidavit verifying its content did not comply with O 41 r 1(5) of the Rules of the High Court 1980. The objection was heard on 17 March 1995.

Held, overruling the preliminary objection: (1) it was clear in the petition that it was filed under the Rules of the High Court and even the number given by the court registry was for originating petition and not for companies (winding-up); (2) in a petition under s 181 of the Companies Act 1965, the applicable rule of procedure to observe should be the Rules of the High Court 1980 and not the Companies Winding-Up Rules 1972; (3) there was no requirement under O 88 r 5 of the Rules of the High Court 1980 or for that matter under O 9 that in order for a petition to be regular it had to be properly verified or supported by an affidavit on filing. A petition on its own was regular and its evidential aspect was another matter; (4) the annexed petition save for two discrepancies was a copy of the petition filed in court and annexing it to the verifying affidavit should be adequate.

Ting Sing Hat v Kejuruteraan Awam Cang Ceng (M) Sdn Bhd & Ors [1995] 4 MLJ 295; (1995) CSLR XX[4649] High Court, Miri (Richard Malanjum J).

The six petitioners (five individuals and one company) collectively held 25.97% of the issued shares in the capital of the company. They petitioned for relief under s 216 of the Companies Act (Cap 50) ('the Act') and claimed that the actions of the board of directors ('the board') and majority shareholders from May 1990 to January 1992 constituted a course of conduct demonstrating oppression and which was in complete disregard of the interests of the minority shareholders. They wanted the company to be ordered to purchase from them all their shares in the company at a price to be assessed by a firm of accountants appointed by the court or, in the alternative, for the company to be wound up. Dissensions within the company had arisen when the board agreed to diversify into the fast-food bakery business and made substantial investments in a company ('CDF') which was incorporated on 18 December 1989. CDF suffered heavy losses and the petitioners had opposed the continuation of the company's investment in CDF.

Held, dismissing the petition: (1) in the light of the authorities and the evidence as it stood, the petitioners have not made out a case of oppression and disregard of minority interests The board and majority shareholders had acted in the honest belief that their conduct was in the best interests of the company and its shareholders as a whole; (2) the court should not act as a supervisory board over management decisions of corporations. As long as such decisions are taken honestly and in good faith, the fact that they are wrong decisions does not entitle disgruntled shareholders to apply for relief under s 216 of the Act; (3) it was not scandalous in July 1991 for CDF to offer further shares at par when it was already losing money; (4) the question whether the expulsion of the first and second petitioners from the board is reasonable or amounts to oppression depends entirely on the particular facts of this case and on the motive behind the expulsion. In the court's opinion, no adverse inference can be drawn from the expulsion of the two petitioners from the board in the present case.

Re Tri-Circle Investment Pte Ltd [1993] 2 SLR 523 High Court, Singapore (Judith Prakash JC).

Kuah Kok Kim & Ors v Chong Lee Leong Seng Co (Pte) Ltd [1991] SLR 122 Court of Appeal, Singapore (Yong Pung How CJ, Thean and Chao Hick Tin JJ).

In this case Mohamed Jee (since deceased) held 10,909 shares in Coliseum Stand Car Services Ltd and was a majority shareholder in the company. There were two other shareholders with 1,364 and 2,727 shares respectively. An application by way of originating motion under s 181 of the Companies Act 1965 (Act 125) was moved by the minority shareholders and in Re Coliseum Stand Car Service Ltd [1972] 1 MLJ 109 the High Court held that the majority shareholder had conducted the affairs of the company without proper regard to minority interest. He ordered the transfer of 4,800 shares from the majority shareholder to minority shareholders jointly so as to reduce the voting power of the majority shareholder. He also ordered that an accountant be appointed to determine the value of the shares to be transferred to minority shareholders. The accountant's report was completed on 18 November 1982. The accountant fixed the price of one share at $4.68. The applicants then asked the court to set off the purchase price of the shares against all sums improperly obtained by the majority shareholder which was calculated as $131,228.

Held: the transfer of shares to the minority shareholders should be effected without any payment to the first respondent, the majority shareholder.

Re Coliseum Stand Car Service Ltd; Abdul Khalik v Mohamed Jee & Ors [1986] 1 MLJ 66 High Court, Kuala Lumpur (Zakaria Yatim J).

A company was formed by Madam Chi Liung and her son Tong Yew Seng and incorporated in 1938 under name and style of Chi Liung & Son Ltd with a share capital of $500,000 divided into 500 shares of $1,000 each. Mother and son took one share each and subscribed to its articles of association. Later by resolution pursuant to its articles the authorized capital was increased; the position at the time of these proceedings was that the amount of paid up capital was $3,000,000 made up of 3,000 shares held in unequal numbers by 11 shareholders of the family of Madam Chi Liung and descendants through her son Tong Yew Seng and his wife, the shares of those dead were represented by their estates. It was a domestic and family concern. Madam Chi Liung had appointed the petitioner Managing Director of the company and by a power of attorney had empowered him to exercise all the powers of a governing director of the company on her behalf. She had also made three wills in her last days with revocations and new appointments as governing director of the petitioner, the first respondent and one Tong King at different times. When she died in 1966 the petitioner applied for probate to establish his right which was contested by the other two, likewise by wills in their favour, and there is a probate suit now pending in court with regard to the three wills made by the deceased. While this contest was in court there arose disputes among the interested shareholders and a scramble for power to control the company gave rise to the present petition as a shareholder of the company initiating these proceedings under provisions of s 181(1) of the Companies Act 1965 (Act 125) alleging that the affairs of the company are being conducted by the respondents in a manner oppressive to himself and other shareholders as members of the company. The company was added as third respondent by order of court. The question for consideration was whether there had been or was threatened the sort of oppression which is contemplated by s 181(1) of the Act. The acts of oppressions alleged were (1) the dismissal of the petitioner from his position as Managing Director, (2) appointment of the first and second respondents as Managing Director and Assistant Managing Director respectively under circumstances which were not authorized by the company's articles of association, (3) the registration of 325 of the petitioner's shares in the name of the first respondent.

Held: with regard to (1) and (2), the affairs of the company were being conducted contrary to the articles of association and were oppressive to one or more of its members. With regard to (3) the registration of petitioner's shares in the name of first respondent was by itself an act of oppression. There will be orders under sub-ss (2) and (4) of s 181 of the Companies Act and relief so as to maintain the status quo till determination of the probate action.

Re Chi Liung & Son Ltd; Tong Chong Fah v Tong Lee Hwa & Ors [1968] 1 MLJ 97 High Court, Kuala Lumpur (Gill J).

Kumagai Gumi Co Ltd v Zenecon Pte Ltd & Ors and other appeals [1995] 2 SLR 297; (1995) CSLR X[657] Court of Appeal, Singapore (Yong Pung How CJ, Karthigesu and LP Thean JJA).

Kumagai Gumi Co Ltd v Zenecon Pte Ltd & Ors and other appeals [1995] 2 SLR 297; (1995) CSLR X[657] Court of Appeal, Singapore (Yong Pung How CJ, Karthigesu and LP Thean JJA).

Kumagai Gumi Co Ltd v Zenecon Pte Ltd & Ors and other appeals [1995] 2 SLR 297; (1995) CSLR X[657] Court of Appeal, Singapore (Yong Pung How CJ, Karthigesu and LP Thean JJA).

Kumagai Gumi Co Ltd v Zenecon Pte Ltd & Ors and other appeals [1995] 2 SLR 297; (1995) CSLR X[657] Court of Appeal, Singapore (Yong Pung How CJ, Karthigesu and LP Thean JJA).

The company offered the petitioner preference shares to raise additional capital. The petitioner accepted the offer and paid the company its subscription of the shares. The company allotted the shares to the petitioner 4[1/2] months after this payment. Three years later, the company informed the petitioner that it would redeem the preference shares from the petitioner. The company gave the petitioner the option to convert the preference shares to ordinary shares, or cease to be a shareholder. The petitioner declined to convert the shares and brought this action for unfair discrimination and oppression by the company under s 181 of the Companies Act 1965 as follows: (1) non-payment of dividends; (2) refusal to accord the petitioner the voting rights of ordinary shareholders; (3) failure to agree on compensation in lieu of dividends; (4) refusal to allow the petitioner to vote at the extraordinary general meeting of the company, which was convened to amend the memorandum and articles of association to create a new class of preference shares; (5) failure to amend the redemption provisions of the articles of association.

Held, dismissing the petition: (1) no dividends were payable because the company suffered a loss. Section 365 of the Companies Act 1965 provides, inter alia, that dividends are to be paid out of profits. Furthermore, the petitioner had not even been registered as a shareholder. Allotment alone was insufficient to create the status of membership or confer rights, even though the company had earlier agreed to pay dividends from the date of subscription, as the agreement must be construed in the context of legal right and obligation. 'Issue of shares' means allotment plus registration or some other act; (2) the petitioner was entitled to the voting rights of ordinary shareholders only if, inter alia, no dividend was declared. These rights would only arise if a dividend was payable but was not paid or declared by the company. Since no dividend was legally payable (because there was no profit), the company did not default in denying the petitioner the voting rights of ordinary shareholders; (3) the company did not have to pay compensation in lieu of dividends. Compensation would only accrue in default of dividend payments, and dividends were not legally payable here. In any case, an article of association stated that compensation was to be 'worked out by mutual agreement', which in itself is a contract void for uncertainty; (4) the petitioner had no voting rights at the extraordinary general meeting because it was not a member of the company. Also, the petitioner was not unfairly discriminated against or oppressed by the creation of a new class of preference shares because the new shares were for injecting greater capital into the company which was making a loss. The new shares would benefit the company and were therefore in the best interests of the company; (5) there was no agreement to amend the redemption provisions of the article. Notwithstanding this, a special resolution to amend the article did not carry through at a general meeting of the company; (6) the petitioner did not bona fide file this s 181 petition. There was no continuing state of oppression or propensity for oppression. The petitioner used s 181 for the collateral objective of being paid out preferentially at its original investment price plus dividends rather than to accept conversion of its preference shares to ordinary shares with a bonus issue. The petitioner had invested in the company on the unfulfilled prospect of a listing. The petitioner did not have the genuine objective of obtaining s 181 relief, and this was an abuse of the process of the court.

Re Premium Vegetable Oils Sdn Bhd; Chloride Eastern Industries Ltd (Petitioner) [1995] 4 MLJ 95; (1995) CSLR X[663] High Court, Johor Bahru (Haidar J).

Tuan Haji Ishak bin Ismail & Ors v Leong Hup Holdings Bhd and other appeals [1996] 1 MLJ 661; (1996) CSLR VI[1756] Court of Appeal, Kuala Lumpur (Mahadev Shankar, Siti Norma Yaakob Jjca and Abdul Malek J).

The petitioner (SSL), GCO and Foo were shareholders of Asahi Metal Pte Ltd. The petitioner sought relief under s 216 of the Companies Act (Cap 50, 1994 Ed) (the Act). He raised several grounds of complaint, the main ground being the contention that purported interest payments to another company (GCOPL), a company in which GCO had an interest, constituted siphoning off by GCO and Foo of the assets of Asahi Metal to enrich GCOPL. Another ground of complaint by SSL was in relation to two payments in 1989 purportedly made by the company to an Indonesian company for the purchase of pewter alloy. It was contended that these were fictitious payments and that the money had been siphoned off by the other shareholders for their own use. A third ground of complaint was that Asahi Metal had bought three properties for investment when it had no money to pay the deposit and had to borrow from GCOPL for that purpose at 2% interest per month.

Held, allowing the petition: (1) on the evidence, the petitioner had known that Asahi Metal would borrow and did borrow from GCOPL at generally 2% interest per month for its needs. There was no basis for the complaint concerning the interest payments to GCOPL; (2) as for the complaint relating to the purchase of the properties, the evidence indicated that SSL and the others had discussed and decided that the purchases were good investments even if it meant that the money borrowed from GCOPL would have to be paid with interest. In any event, even assuming SSL had not known that the company had to borrow from GCOPL to pay the down-payment, SSL could not complain that Foo and GCO did not act in the interest of the company in purchasing the three properties as the investments had turned out to be profitable; (3) as for the complaint relating to the two purported payments in 1989, the evidence indicated that these were fictitious payments. The two payments were sufficient to constitute oppression of the petitioner in disregard of his interests as a shareholder; (4) it was not necessary for the offending conduct to be continuing at the time of the presentation of the petition or the hearing of the petition for relief to be granted under s 216 of the Act. Whether the conduct was continuing was an important factor in determining the appropriate remedy. In making such determination, the court would have regard to all the circumstances; (5) in the present case, the appropriate remedy was to order the other shareholders to purchase the petitioner's shares as the amounts taken out under the two payments had not been repaid to the company and the company continued to be liable for interest on the money borrowed from GCOPL.

See Soon Lee v Gan Cheong Or & Ors [1995] 3 SLR 501; (1995) CSLR X[656] High Court, Singapore (Chao Hick Tin J).

[Annotation: Reversed on appeal. See [1996] 2 SLR 9; (1996) CSLR X[666].]

The respondent invited the appellant, an Italian, to invest in a company called La Mar Diamant (Overseas) Pte Ltd ('the company') upon finding out that the appellant was interested in setting up business in Singapore. The company was at that time inactive. The respondent conducted his business in building materials through another company called La Mar Diamant (SEA) Pte Ltd which had a paid up capital of S$2.4m. Following discussions between the appellant and the respondent, the latter was persuaded by the appellant to re-activate the company, in which the appellant would have an equal say, by buying over half the issued and fully paid shares at S$7 per share which the respondent represented to the appellant was based on the net worth of the company as at 1 March 1992. Accordingly the appellant agreed to buy 20,750 fully paid up shares in the company from the respon-dent for S$145,250. No formal agreement was entered into between the appellant and the respondent. It was orally agreed that the appellant would be responsible for the operations of the company in Italy whilst the respondent would be mainly responsible for the operations in Singapore; that joint signatures of both the appellant and the respondent were required for all cheques drawn on the company's foreign account with Banca Commerciale Italiana (BCI) at Carrara, Italy; and that the appellant would be the 'manager' or director of the company and have an equal role in the running of the company and in decision making. It was also agreed that the respondent would sponsor the appellant's application for an employment pass. The written content of the agreement was contained in a letter in Italian from the respondent to the appellant dated 15 February 1992 and countersigned by the appellant on 16 February 1992. The material terms of this letter may be thus summarized from an English translation which was provided: that the appellant will be given 50% of the paid up capital in the company (20,750 shares) upon payment of S$145,250 (about 109m lire at the rate of exchange of 750 lire to S$1) calculated at S$7 per share which was based on the accounts of the company for the year ended 1 March 1992; that the appellant will deposit in the company's account at Banca Commerciale Italiana (BCI) Carrara, Italy S$10,000 by 15 March 1992 as a guarantee for the payment of the purchase price of the 20,750 shares, which will be returned once BCI confirmed the receipt of the purchase price; that the appellant 'would have to work full time and exclusively in the interest of the business' of the company; that if the appellant wanted to apply for an employment pass in Singapore, he would have to apply to the relevant authorities and state his position as 'Sales Manager of the company' and declare a monthly salary of not less than S$2,500; that if the appellant received a salary the respondent would be entitled to the same salary; that in the event either party wished to sell his shares, the other would be given the first offer but neither could sell their shares during the first year of operation; and that in the event of disagreements or disputes, they shall be resolved by arbitration of three lawyers or accountants, one of whom shall be independently appointed. Upon the signing of the letter dated 15 February 1992 the appellant paid the deposit of S$10,000, the receipt of which the respondent duly acknowledged by endorsing his signature on the letter. The appellant paid the full purchase price for the 20,750 shares in the company, that is to say, S$145,250 converted to lire at 750 lire to S$1 (about 109m lire) into the company's account with BCI on 27 March 1992 and thereupon 20,750 shares in the company were duly transferred to the appellant on 1 April 1992. However the appellant by his petition alleged that thereafter the respondent became rude and intolerant of the appellant's presence on the company's premises. The respondent refused to pass the necessary resolutions to make the appellant a director of the company or a signatory of the company's banking accounts. He further refused to sponsor the appellant's application for an employment pass. He refused to provide any statement of the company's accounts and any financial information about the company. Finally, he refused to refund the deposit of S$10,000 as agreed and it was only after the appellant had instructed solicitors that the appellant agreed to and did make partial refund of S$8,617. The appellant finding himself thus being kept out of the management of the company asked for the return of the money he had paid for the 20,750 shares in the company by a letter addressed to the respondent dated 18 April 1992. The respondent's reply to this request was that the appellant could buy him out at S$13 per share. On 17 July 1992 the appellant presented his petition under s 216 of the Companies Act (Cap 50) pleading oppression and injustice towards him by the respondent and claimed, inter alia, that the respondent buy back the 20,750 shares at S$7 per share or the lump sum of 109m lire whichever is more, or alternatively that he be entitled to sell the shares to a third party at the best or market price available. He also claimed the costs of his petition. The learned trial judge found that the charges of oppression and injustice against the appellant had been proved and she ordered, inter alia, that the respondent was to purchase the appellant's shares based on the net tangible asset backing of the shares.She awarded the appellant half the costs on the petition to be taxed unless otherwise agreed. The appellant appealed.

Held, allowing the appeal: (1) s 216(2) of the Companies Act (Cap 50) provides that where it has been proved to the satisfaction of the court that there is oppression or injustice against a member, then, 'with a view to bringing to an end or remedying the matters complained of' the court may without prejudice thereto, inter alia, provide for the shares of that member to be purchased by the other members or by the company itself. The principle underlying the order that the remaining members or the company 'buy out' the member complaining of oppression or injustice is one of fairness having regard to the facts of that particular case; (2) the difficulty that one encounters in this case is that the company was not in any real sense a going concern. It was an inactive company in February 1992 when the appellant was invited by the respondent to 'buy into the company'. This was not denied by the respondent. On the respondent's own admission the price of S$7 per share was not an asset backed value for the year ended 1 March 1992. It was more like S$5.64 per share based on those accounts; (3) there is no doubt that the power given to the court by s 216(2) of the Companies Act (Cap 50) of 'bringing to an end and or remedying the matters complained of' confers on the court an unfettered discretion subject only to the overriding requirement of fairness, and as the English authorities show the court is not bound to fix a value by valuation as at the date of the presentation of the petition or on the date the order is made; (4) in the court's view there is ample persuasive authority for departing from what might be thought to be a general rule to value the shares as at the date of the order; (5) although in the case of a company which has always been active a valuation would produce the fairest result, it would not necessarily be so where, as in this case, the company had been inactive and was being resuscitated by the injection of fresh capital. Each case must depend on its own particular facts; (6) on the facts of this case a valuation as at the date of the court's order or at the date of the presentation of the petition or a valuation at an earlier date or any valuation at all could not produce a fair result. Fairness could only be achieved in this case by ordering the respondent to purchase the shares at the price at which the respondent sold them to the appellant in the first place; (7) (8) although the question of costs is always in the discretion of the court and an appellate court will not readily interfere with the proper exercise of that discretion, an appellate court should not hesitate to interfere where the discretion has been manifestly exercised wrongly or exercised on wrong principles; (9) an agreement to arbitration cannot oust the right to resort to litigation although by the terms of the Arbitration Act the court has a discretion, in a proper case, to stay the litigation in preference to arbitration;in the court's view, in this case, the learned trial judge had proceeded on wrong principles in depriving the appellant of half his costs. She disregarded the principle that a successful party who had acted neither improperly nor unreasonably ought not to be deprived of any part of his costs. Accordingly the order for costs was set aside. Full costs of the petition to be taxed unless agreed was awarded to the appellant.

Tullio v Maoro [1994] 2 SLR 489; CSLR X[649] Court of Appeal, Singapore (Yong Pung How CJ, Karthigesu and LP Thean JJA).

This petition was presented under s 181(1)(a) and (b) of the Companies Act 1965 ('the Act'), and it contained allegations that the affairs of the 12th respondent, PJ Medical Group Sdn Bhd ('the company') had been conducted in a manner which was oppressive to, or in disregard of, or unfairly discriminatory against or prejudicial to the petitioners. A group of doctors ('the petitioners') had decided to set up a private hospital ('the hospital'), and thus, they incorporated the company as a private company limited by shares, and four of the petitioners became its first shareholders as well as directors. The company then purchased a piece of land with the intention of building the hospital on it, and approached several financial institutions to finance the development of the hospital, but was turned down. Thus, the company approached the second and third respondents to be partners in developing the hospital. The second and third respon-dents were represented by the fourth and fifth respon-dents respectively. The equity ratio of the company was restructured, with the petitioners holding 51% of the shares, and the respondents the remaining 49%. The full board of the company comprised of nine directors, five representing the petitioners, and four representing the respondents, and the chairman was the fourth respondent. All matters relating to the hospital were managed by a project committee. The directors of the company met as a board and made some decisions, among which, was an invitation to the first respondent to be a shareholder. Subsequently, a shareholders agreement was entered into, the result of which, the first, second and third respondents held 79% of the company's shares, and the petitioners the remaining 21%. The company's new board of directors comprised of eight members, six from the respondents and two from the petitioners. A management committee, comprising of the first and second respondents and a nominee of theirs, was also set up. All the directives of the management committee were tabled before the company's board of directors which had the final say in the decision making process. The company's board of directors then made a number of decisions and awarded many contracts to companies whose appointments subsequently became a subject matter of the petition. Numerous problems continued to arise, and finally the respondents decided to abandon the project of developing the hospital and withdraw from the company. It was against this background that the petition was made by the petitioners under s 181(1)(a) and (b) of the Act. The petitioners also complained that their legitimate expectation of developing the hospital had not been fulfilled despite the representations made by the second and third respondents, and that the first, second and third respondents acting through their representatives, the 4th to the 11th respondents, had not been honest and fair in their dealings in developing the hospital but had, instead, worked against the interests of the petitioners by promoting their own inter-ests through companies related to them.

Held, dismissing the petition: (1) s 181 of the Act was specially enacted to provide a remedy to minority shareholders in limited companies who are being oppressed or disregarded, or against whom certain actions have been taken by their companies which are unfairly discriminatory against, or prejudicial to them; (2) s 181 of the Act differs from s 210 of the Companies Act 1948 [UK] in that it is wider in scope, and does not specify the winding up of a company on the 'just and equitable ground', but leaves the court with a wide discretion as to the relief it may grant; (3) to invoke s 181(1)(a) of the Act, the petitioner must show that the affairs of the company were conducted, or that the powers of the 4th to the 11th respondents were exercised, in a manner which was oppressive to or in disregard of the petitioners' interests as a shareholder of the company. The mere fact that the respondents possessed the majority of the voting power and, in reliance upon that power, made policies or decisions with which the petitioners did not agree, was not enough; (4) for there to be oppression, there must be a visible departure from the standard of fair dealing wherein the petitioners were constrained to submit to some overbearing act or attitude on the part of the respondents. Similarly, disregard would involve something more than a failure to take account of the petitioners' interests. There must be awareness of those interests and an evident decision to override them or brush them aside; (5) under s 181(1)(b) of the Act, the essence of the wrong done to the petitioners would have to be 'unfairness' of the discrimination or prejudice suffered by the petitioners resulting from some act of the company in the advancement of its objectives. Mere discrimination against or prejudice to the petitioners is insufficient to attract the court's jurisdiction to intervene; (6) considering all the evidence in its totality, the court found that the petitioner had failed to make out a case under either s 181(1)(a) or (b) of the Act. Whatever decisions taken by the respondents in the management of the company were done openly and with the full knowledge of the petitioners. The petitioners appeared to have willingly entrusted the management, finance and development of the hospital to the first and second respondents. Under these circumstances, whatever that was done by the respondents should be considered to have been done with the consent, acquiescence and co-operation of the petitioners. In themselves, the acts and decisions of the respondents could hardly be described as being oppressive, disregardful, or unfairly discriminatory or prejudicial in the context of s 181(1)(a) and (b) of the Act.

Jaya Medical Consultants Sdn Bhd v Island and Peninsular Bhd & Ors [1994] 1 MLJ 520; CSLR X[648] High Court, Kuala Lumpur (Siti Norma Yaakob J).

Tong Kok Chai v Ocean Front Pte Ltd & Anor [1988] SLR 642 High Court, Singapore (Thean J).

Dunlop Malaysia Industries Bhd v Pernas-Sime Darby Sdn Bhd & Ors [1985] 2 MLJ 101 High Court, Kuala Lumpur (George J).

Sing Eng (Pte) Ltd v PIC Property Ltd [1990] SLR 81 Court of Appeal, Singapore (Wee Chong Jin CJ, Lai Kew Chai and Thean JJ).

The Seremban Town Service Sdn Bhd had resolved at its annual general meeting to allot shares to bumiputras. The directors of the company subsequently decided to issue shares to Malay employees. No offer or notice was given to the respondent and other shareholders in accordance with art 46 of the articles of association of the company. The respondent applied for a declaration that the acts of the appellants, the directors of the company, in issuing the shares was ultra vires the articles of association of the company. The learned trial judge allowed the application, as he held that the act of the appellants in allotting the shares was contrary to the resolution passed at the annual general meeting (see [1974] 2 MLJ 206). The appellants appealed.

Held, dismissing the appeal: (1) the acts of the appellants were ultra vires the articles of association as the appellants had failed to offer the shares or give notice to the respondent and other shareholders as required by the articles of association of the company; (2) the offer was also on offer to the public.

Mahima Singh & Ors v Buldev Singh [1975] 1 MLJ 173 Federal Court, Kuala Lumpur (Ali, Ong Hock Sim and Raja Azlan Shah FJJ).

[Annotation: Decision of the High Court in [1974] 2 MLJ 206 affirmed.]

Mohamed Yahaya v MS Ally Sdn Bhd & Ors [1985] 1 MLJ 243 High Court, Kuala Lumpur (George J).

The plaintiff was the registered shareholder of ordinary shares in the first defendant. The second to seventh defendants were directors and shareholders of the first defendant. The plaintiff had obtained three ex parte interlocutory injunctions ('the injunctions') to restrain the first defendant from proceeding with or holding its extraordinary general meeting scheduled for 31 January 1991 ('the EGM') or any adjournment thereof which had been called for the purpose of altering art 56 of its articles of association so as to impose a shareholding qualification on directors and to restrain the first to the seventh defendants from implementing and/or exercising their powers to effect certain resolutions passed at the 42nd annual general meeting held on 21 January 1991 ('the AGM') of the first defendant. The defendants made these applications to discharge the injunctions. In the indorsement to the writ herein filed on 23 January 1991, the plaintiff claimed to have instituted the action for and behalf of himself and other shareholders of the first defendant other than the second to seventh defendants. The calling of the EGM, at which it was intended to pass the resolution to alter art 56 aforementioned, was said to be an abuse of the powers of the second to seventh defendants as directors of the first defendant, was not for the benefit of the first defendant, and was a fraud on the minority shareholders of the first defendant. The sole purpose of passing the resolution was said to be to perpetuate the second to seventh defendants' control over the first defendant. As for the AGM, it was expressly stated in the notice calling for the AGM that all proxy forms should be deposited at the first defendant's registered office at least 48 hours before the AGM. The plaintiff had appointed an advocate and solicitor to be his proxy who had duly lodged the requisite proxy form at the AGM, but the plaintiff's proxy was excluded from the AGM on the ground that the proxy form had not been deposited within the requisite time period. It was contended that the exclusion of the plaintiff's proxy and the rejection of the proxy form was wrong in law and an abuse of the powers of the second to seventh defendants as the first defendant's articles of association did not impose a time limit for the deposit of proxy forms. Thus it was contended that the AGM should be declared null and void and all resolutions passed thereat be set aside. On behalf of the defendants it was argued that the exclusion of the plaintiff's proxy was a mere irregularity which has not occasioned substantial injustice and was curable under s 355 of the Companies Act 1965 ('the Act'). In the defendants' application to discharge the injunctions, it was argued firstly, that there had been unreasonable delay on the plaintiff's part in applying for the injunctions as the notice calling for the injuncted EGM had been issued on 3 January 1991 but it was not until 24 January 1991 that the plaintiff's application was made. Secondly, it was submitted that the general indorsement in the plaintiff's writ did not disclose any reasonable cause of action but merely set out the prayers for various reliefs. Thirdly, it was submitted that ex parte procedure adopted by the plaintiff in obtaining the injunctions was inappropriate in the circumstances. The plaintiff contended that on the facts of the case, speed and secrecy were essential in applying for the injunctions because if the defendants had notice of the intended application, they might have brought forward the date of implementation of the proposed resolutions. Fourthly, it was submitted by the defendants that thd the locus standi of the plaintiff to maintain the action. It was contended that the plaintiff proceeded with the action based on sheer speculation and that he had failed to show how his interests would be affected.

Held, dismissing the applications: (1) delay on the part of the plaintiff in seeking an interlocutory injunction may be of importance when the balance of convenience is being determined. Although such delay may give rise to an inference that he has not suffered hardship or prejudice, such inference is easily open to rebuttal by direct evidence of the particular circumstances. In the present case, such delay as there was had been satisfactorily explained; (2) the indorsement in the amended writ of summons did disclose a cause of action. The lengthy affidavit of the plaintiff filed in support of the application pursuant to which the injunctions had been granted had identified a legal right sufficient to give rise to a justiciable cause of action; (3) the ex parte procedure will only be appropriate either where the delay occasioned by notifying the defendant may cause to the plaintiff irreparable damage, or where secrecy is essential. In the instant case, given the acrimony generated by the disputes between the parties, the plaintiff's apprehensions about proceeding inter partes or even on the basis of an opposed ex parte application were not unjustified; (4) the non-disclosure alleged related to a material fact but it was not so severe that had it been disclosed the court would have declined to intervene by way of ex parte interlocutory injunctive relief. There is no absolute right to have an ex parte order obtained without due disclosure set aside: there is a discretion in the court whether to do so or not; (5) a member of a company has the right to bring an action for a declaration that an alteration of the company's articles is void and of no effect. The plaintiff as an individual member was entitled to maintain the present proceedings and there was no need for him to sue in a representative capacity. The rule as to representative proceedings embodied in O 15 r 12(1) of the Rules of the High Court 1980 should be treated as being not a rigid matter of principle but a flexible rule of convenience in the administration of justice and should be applied, not in any strict or rigorous sense, but according to its wide and permissible scope; (6) the right of a member of a company to vote by proxy has been conferred by s 149(1) of the Act. The effect of the subsection is to give the right to appoint proxies to any member who is entitled to vote at company meetings. From the words 'whether a member or not' used in the subsection, it is obvious that the proxy may or may not be a member. Hence art 51, which required the proxy to be a member of the company, sought to contract out of the provisions of the subsection and was therefore void and of no effect; (7) the right to vote is one of a member's fundamental rights. Excluding the proxy and thus preventing the plaintiff from exercising his statutory right to vote was not a mere procedural irregularity curable by the majority but an illegality since it was an abuse of power or oppression on the minority which vitiated and therefore rendered null and void the AGM and all resolutions passed thereat. In the circumstances, there could be no recourse to the validation provisions of either s 355(1) or s 355(3) of the Act; (8) the word 'proceeding' in s 355(1) of the Act should not be confined solely to legal proceedings but should extend to all proceedings at company meetings provided that they are required to be held under the Act.

Lim Hean Pin v Thean Seng Co Sdn Bhd & Ors [1992] 2 MLJ 10 High Court, Penang (Edgar Joseph Jr J).

The company had two shareholders. In exercise of the powers under the articles of association the majority shareholder requisitioned for the purchase of the holdings of the other. The other resisted the attempt.

Held: the articles empowering the requisition of shares of the only other holder is not repugnant to the Companies Act (Act 125). It was purely a matter of contractual obligation and the plaintiff must be held to the obligation he had undertaken.

Wong Kim Fatt v Leong & Co Sdn Bhd & Anor [1976] 1 MLJ 140 High Court, Kuala Lumpur (Chang Min Tat J).

[Annotation: For related proceedings, see [1975] 1 MLJ 20.]

Mohamed Yahaya v MS Ally Sdn Bhd & Ors [1985] 1 MLJ 243 High Court, Kuala Lumpur (George J).

Lim Hean Pin v Thean Seng Co Sdn Bhd & Ors [1992] 2 MLJ 10 High Court, Penang (Edgar Joseph Jr J).

X Sdn Bhd charged its land to A as security for the latter's loan to the former. Upon X Sdn Bhd's default of the loan A obtained an order for sale of the land and sold it by public auction to Y in April 1990. In June 1990, D entered a private caveat in respect of X Sdn Bhd's land. D was a shareholder, director and general manager of X Sdn Bhd. A applied to the High Court to remove D's caveat. X Sdn Bhd had been wound up since May 1989. D firstly argued that A was not an 'aggrieved party' within the meaning of s 327(1) of the National Land Code 1965 and A was therefore not entitled to apply to remove the caveat.

Held, allowing the application: (1) A, as the registered chargee, was an 'aggrieved party' within the meaning of s 327(1) of the 1965 Code; (2) a shareholder has no legal or equitable interest in land belonging to the company. Nor does the company hold land in trust for its shareholders; (3) D as the shareholder, director and employee of X Sdn Bhd, had no caveatable interest in X Sdn Bhd's land either under s 323(1)(a) or (b) of the 1965 Code. D accordingly was not entitled to enter the caveat. Even if assuming D had such a caveatable interest in X Sdn Bhd's land, the balance of convenience was not in D's favour for the caveat to remain until the trial of D's action; (4) D had no locus standi to sue A in respect of X Sdn Bhd's charge because according to the rule in Foss v Harbottle, only X Sdn Bhd was entitled to do so. The facts in this case did not fall within any of the exceptions to the rule in Foss v Harbottle; (5) even if assuming X Sdn Bhd's charge was invalid, D's action against A would not succeed because D himself was involved in the loan transaction; (6) under the Torrens system, the register is everything. A's registered charge was indefeasible unless D could challenge it by proving any of the circumstances under s 340(2) of the 1965 Code.

Kwong Yik Bank Bhd v Official Assignee as Receiver of the Estate of John Gifford Originating Summons No 24-231-90 High Court, Malacca (Mohamed Noor J).

[Annotation: The judgment was delivered in Bahasa Malaysia.]

Ong Heok & Anor v Ooi Bee Tat & Ors [1982] 2 MLJ 326 High Court, Penang (Gunn Chit Tuan J).

The action was commenced by the plaintiff who sought a declaration that she was still a member of the defendant company which was a company incorporated by guarantee under the Companies Act (Cap 50, 1990 Ed). The defendants or the members collectively are a church. The defendants' church board became aware in 1987 of serious accusations being made by the plaintiff against the senior pastor and the leadership of the church. The defendants claimed that various attempts were made to counsel her but these were to no avail. At an extraordinary general meeting ('EGM') of the defendants, it was voted that the plaintiff be removed as a member of the defendant company. This decision was also resolved at a subsequent board meeting. The plaintiff's action, when commenced, was founded on the alleged invalidity of the resolution passed at the EGM of the defendants which purported to remove the plaintiff as a member, and the non-existence of an alleged board meeting which also resolved to remove the plaintiff as a member of the defendant company. The defendants conceded that the EGM resolution was not legally effective to remove the plaintiff as a member. The plaintiff then proceeded with this action on the bases that: (i) there was no board meeting and (ii) if there was, it was null and void on the grounds that (a) it failed to comply with art 9 of the defendant company's articles of association in that no persistent efforts had been made to win her back to the standard of faith and conduct required of an ordinary member of the church; and/or (b) it contravened the rules of natural justice, viz, (i) the right to be heard by an unbiased tribunal; (ii) the right to have notice of the charges of misconduct; and (iii) the right to be heard in answer to those charges.

Held, dismissing the plaintiff's action with costs: (1) from the evidence and the plaintiff's conduct during the pre-trial stage, there was no reason to believe that the board meeting was fictitious. Furthermore, the internal evidence lent support to its existence. The minutes of that board meeting showed that the board not only ratified the EGM resolution but also passed its own resolution to remove her; (2) but there are degrees of probabilities. Here, the plaintiff's attempt to establish the charges solely through the means of cross-examinations and argument fell far short of the standard of proof required; (3) as regards the plaintiff's allegation that art 9 of the defendant company's articles of association had been contravened in that the church board had not made patient and persistent efforts by some members or members delegated by the board to win her back to the standard of faith and conduct required of her, there was overwhelming evidence that efforts of a degree that were both patient and persistent had been made by members of the church board. There was no need imposed by art 9 for the board to pass formal resolutions every time they desired to appoint pastors to counsel or win back doubting members. Every pastor who attended any church board meeting (pastoral or otherwise at which the conduct of the plaintiff was discussed) was entrusted with the responsibility of winning the plaintiff back into the fold. Any informal delegation is sufficient, and therefore each of the pastors who counselled the plaintiff was delegated, in law and in fact, to do so; (4) it could not be said that the rules of natural justice do not apply to a company. Incorporation is an important factor to be taken into account in the application of such rules, primarily because the directors owe a duty to act in the interest of the company which may be, in certain circumstances, incompatible with such application. But it is not the only or decisive factor. Equally important is the nature of the decision to be made. The correct approach is not to ask what the defendants are but what form and nature of the power is that is exercisable and the consequences to the affected member upon its exercise, having due regard to the express words of the power; (5) the nature of the power in art 9 was expulsion on the grounds of misconduct. The power was not expressed in unrestricted terms. It may be that if the board made a bona fide decision on the evidence before it that a particular member had been guilty of any misconduct a court of law will not substitute its opinion for that of the board, but that was no reason for holding that the rules of natural justice should not apply in arriving at that opinion. Expulsion based on misconduct, thus, is readily subject to the rules of natural justice and there was nothing in the fact of incorporation of the defendants which made it incompatible for the church board to exercise its powers in the interests of the defendants and to do it in compliance with the rules of natural justice; (6) bias as an aspect of natural justice does not apply to a company or board meetings. Members are not required by law to vote in any person's interests (including that of the company) other than their own. Directors are only required to vote in the interest of the company and the members as a whole and to exercise their powers in good faith. The fact that one director has a personal animosity against another director or member does not mean that he cannot vote against that director's or member's interest in the interest of the company. The two are not compatible. In any case, the question of bias or likelihood of bias is irrelevant simply because the board's resolution to expel the plaintiff was made after and in confirmation of the EGM resolution. The church board decided not to exercise their power without the sanction of the members at the EGM. They were given an overwhelming vote to do so. They themselves did not vote on the EGM resolution. In convening the EGM, the church board had taken a step which precluded any accusation of bias or likelihood of bias against any member of the board; (7) the plaintiff's charge against the defendants was no less than that the members of the church board had committed the following criminal offences in order to secure her removal as a member of the defendants: (i) giving false evidence under s 191 of the Penal Code (Cap 224, 1985 Ed) ('the Code'); (ii) fabricating false evidence under s 192 of the Code; (iii) using false evidence known to be false under s 193 of the Code; and (iv) criminal conspiracy under s 120A of the Code. The standard of proof in relation to an averment of a crime in civil proceedings is the balance of probabilities;on the evidence, the plaintiff was aware that item one of the agenda of the EGM was directed against her, which was why she avoided the EGM. She was not prepared to confront the church board with, and explain or defend, her accusations before the general body of the members. As regards the opportunity to be heard, there was nothing in art 9 which stated that the plaintiff had to be given another opportunity to be heard before the board could act to expel her. All that it required was that the board should be satisfied that patient and persistent efforts had been made and made in vain. The issues in this case were well known to the plaintiff and she knew the charges and the business of the EGM which was to expel members for sowing discord within the church but she deliberately kept away from the EGM. The plaintiff was therefore not in a position to complain that she was denied the opportunity to defend the charge or charges made against her at the EGM or that the church board, in proceeding in the way they did, had acted unfairly against her.

Peck Constance Emily v Calvary Charismatic Centre Ltd [1991] SLR 359 High Court, Singapore (Chan Sek Keong J).

Public Bank Bhd v Metro Construction Sdn Bhd [1991] 3 MLJ 56 High Court, Kuala Lumpur (Lim Beng Choon J).

Arab Malaysian Finance Bhd v Meridien International Credit Corp Ltd London [1993] 3 MLJ 193 Supreme Court, Malaysia (Jemuri Serjan CJ (Borneo).

The plaintiff applied under s 148(2)(c) of the Sarawak Land Code (the Code) for the sale of the defendant's land (the land). The land was charged to the plaintiff vide a memorandum of charge (the memorandum) whereby the plaintiff agreed to grant to Liki Electrical Co (Liki), a firm owned by Tho Kheng Seng (Tho), a fluctuating overdraft, trust receipt or otherwise to the extend of RM60,000 (the loan). The defendant further covenanted to repay the loan which would be owing by Liki to the plaintiff. Clause II(7)(iii) of the memorandum stipulated that the defendant and Liki would not permit or suffer any petition to be presented or any order to be made or any resolution to be passed for the winding up of the defendant's and Liki's business or the bankruptcy thereof. Clause II(8) provided that in the event the defendant (and not Liki) committed a breach of any of the terms of the charge, the plaintiff might after dispatching to the defendant and Liki 30 days' prior notice in writing, recall the loan and/or exercise its right under the Code. Subsequently, Tho was adjudged bankrupt. With the bankruptcy of Tho, the plaintiff, instead of giving the requisite notice under s 148(1) of the Code to remedy the breach by Tho, entered into a settlement agreement (the agreement) with the defendant whereby, inter alia, the outstanding sums in the banking facilities of Tho was to be repaid by the defendant on an instalment basis. Upon the defendant's failure to comply strictly with the terms of the agreement, the plaintiff by a letter (MD5) requested the defendant to update the repayment in arrears failing which legal measures would be commenced against the land. Only part of the arrears were paid while the balance remained unpaid. The plaintiff, by another letter (MD6), demanded the balance sum unpaid to be met within 30 days. The plaintiff regarded MD6 as the notice issued to the defendant in pursuance of the requirement in s 148 of the Code. The issue was whether a proper notice as required under s 148 was ever issued by the plaintiff to the defendant to enable it to apply to the court under that section for an order that the land be sold. The defendant also alleged that MD6 was invalid because it was unsigned. It was deposed by the plaintiff that the original copy of MD6 was duly signed by the plaintiff's solicitor although the copy in the exhibit was not. The plaintiff further submitted that MD6 was not invalidated though unsigned as neither in the charge or the Code was there laid down a format for such a notice. The defendant also argued that she had never received MD6, it being sent to an address where she was no longer residing. No evidence was tendered that she had officially informed the plaintiff of the change of her address in relation to the service of notice. The defendant also submitted that since the plaintiff had changed its identity and is now known as Hong Leong Bank Bhd, it was in no position to maintain the action unless a change of name had been effected.

Held, dismissing the application: (1) s 148 is a provision wherein if the condition precedent is complied with, the chargee may apply to the court for an order for the sale of the charged land. If the condition precedent was not complied with, no order shall be granted for the sale. The condition precedent is that upon the default of either the payment of the principal sum, interest or other moneys secured by a charge, or in the observance of any agreement, expressed or implied in any charge, the chargee is required to give to the chargor, a notice in writing that the chargee will resort to all available remedies unless such default be remedied. A chance is given, before an application is made for the sale of the charged land, for the default to be remedied. The period given is 30 days, unless other period is stipulated in the charge. If during this period the default is remedied, the application for the sale of the charged land would not arise at all; (2) instead it was exercising its right under the guarantee made under the memorandum; (3) it cannot be such a notice because, there was nothing in the evidence that prior to his bankruptcy, Tho on behalf of Liki was ever in default in the payment of any moneys secured by the charge. His default was in the observance of cl II(7). As such, the notice to remedy, for the purpose of s 148, must be in respect of that breach only. As such, MD6 was not a notice for the purpose of s 148; (4) there was no evidence forthcoming from the solicitor or any person who had personal knowledge of the matter; (5) the submission that MD6 was not invalidated though unsigned because there was nothing in the charge or the Code laying down the format of such a notice had no merit at all. If it was so, then any unauthorized person can simply obtain a letterhead and prepare the content and have it sent out to the recipient; (6) the plaintiff cannot be faulted for not sending the notice to the actual place of the defendant's residence. Even if she had not actually received the exhibit, it was deemed to have been served on her pursuant to cl II(1) of the memorandum; (7) by the bankruptcy of Tho, Liki had committed a breach of cl 11(7) of the charge. Under the circumstances, the plaintiff must first serve on the defendant the requisite notice to remedy the breach by having Tho's bankruptcy discharged. By entering into a settlement agreement, the plaintiff was not exercising its right under s 148 with a view to having the land sold;MD6 was an attempt by the plaintiff to comply with the condition precedent required by s 148 as a prelude to an application for the sale of the land;MD6 was further invalid because it was unsigned. The plaintiff's evidence that the original copy of MD6 was duly signed by the plaintiff's solicitor was strictly hearsay and not admissible as this evidence was not the actual knowledge of the deponent;by s 23(6) of the Companies Act 1965, it was not fatal for the plaintiff to have continued its action under its old name although it may continue the action by its new name without affecting its rights and obligations subsisting under its old name.

MUI Bank Bhd v Choo Hui Leng (1996) CSLR IV[251] High Court, Kuching (Abdul Kadir Sulaiman J).

The plaintiff is a licensed finance company incorporated in Malaysia having its registered office in Kuala Lumpur and a branch office at Kuching. By a certificate of incorporation on change of name dated 19 December 1985, the plaintiff changed its name from Malaysia Borneo Finance Corporation (M) Bhd to MBf Finance Bhd. On 7 April 1989, the plaintiff entered into a hire-purchase agreement ('the hire-purchase agreement') with the first defendant who was then trading as Forward Enterprise. Notwithstanding the change of name of the plaintiff, the plaintiff used a printed form of the hire-purchase agreement which bore the old name of the plaintiff. After execution of the hire-purchase agreement, a copy thereof was sent to the first defendant and on such copy there was stamped the new name of the plaintiff with its Kuching branch address. The subject matter of the hire-purchase agreement comprised of, inter alia, four units of forklifts ('the goods'). The hire-purchase price was RM319,950 and after deducting the initial payment of RM81,500, the balance of RM238,450 inclusive of term charges was to be paid by 35 monthly rental of RM6,624 and one final rental of RM6,610. The second defendant executed a guarantee on the same day the hire-purchase agreement was made. In the guarantee, the name of the plaintiff was in its new name. The first defendant defaulted in payment of monthly rental. By letter dated 29 October 1990 to the first defendant, the plaintiff demanded the first defendant to deliver up the goods but the first defendant failed or refused to do so. The plaintiff was not able to repossess the goods as they were not kept at the address given in the hire-purchase agreement and could not be located. The plaintiff sued the first and second defendants and claimed for a sum of RM198,711.88, interest thereon and costs. The deputy registrar entered judgment for the plaintiff against the first and second defendants under O 14 of the Rules of the High Court 1980 ('the RHC'), and struck out the counterclaim of the first defendant under O 18 r 19 and O 92 r 4 of the RHC. The defendants appealed.

Held, dismissing the appeal: (1) the plaintiff acquired its new name in 1985, ie some three years and four months before the existence of the hire-purchase agreement between the plaintiff and the first defendant on 7 April 1989. Therefore, the first defendant had intended to contract with the plaintiff and had so contracted by his signing of the hire-purchase agreement though the plaintiff by then had changed its name from Malaysia Borneo Finance Corporation (M) Sdn Bhd to MBf Finance Bhd. Further evidence could also be found in the guarantee between the second defendant and MBf Finance Bhd wherein the number of the hire-purchase agreement was cited. In addition, MBf Finance Bhd with its Kuching address was stamped on the first defendant's copy of the hire-purchase agreement; (2) from the reply received from the road transport authority, a forklift was not a motor vehicle and therefore the hire-purchase agreement was not subject to the Hire-Purchase Act 1967 ('the Act'). It therefore follows that the agreement was not subject to the Act as the goods were not goods as specified in the First Schedule to the Act to resist the defence that the agreement was void and unenforceable owing to various non-compliances with the provisions of the Act; (3) though it was not a hire-purchase within the provisions of the Act, any hire-purchase instrument involving movable property was required by s 4 of the Hire-Purchase Registration Ordinance of Sarawak (Cap 71) to be so registered. The hire-purchase agreement and the guarantee were contained in a single document which was duly registered with the registrar on 20 April 1989 as shown by the endorsement made at the foot of the guarantee. Therefore, the defendants' defence that the agreement was not enforceable as it was not registered, could not be sustained; (4) the hire-purchase agreement was signed on behalf of the plaintiff by one Chua Chai Hua, the then branch manager of the plaintiff. Being the representative of the plaintiff, Chua Chai Hua had the implied authority of the plaintiff and the hire-purchase agreement was of a nature that no seal of the company was required; (5) the title to the property initially vested in the dealer as the original owner of the goods to be sold at the price of RM271,000. This price was paid to the dealer when the dealer received the sum of RM81,000 from the first defendant and the balance RM190,000 from the plaintiff. On receipt of the price, the dealer had divested its title to the goods and such legal title had vested in the first defendant and the plaintiff jointly according to the proportion of the payments made by both of them. By s 3 of the Bills of Sale Ordinance of Sarawak (Cap 68), in order for the hire-purchase agreement in this case to be construed as a bill of sale, the plaintiff or the first defendant must have exclusive title in the goods to the exclusion of the other. The title to the goods was not exclusive to the plaintiff or the first defendant and in the circumstances, the hire-purchase agreement was not a bill of sale; (6) the plaintiff had demanded that the first defendant delivered up the goods but the first defendant failed or refused to do so. The plaintiff was not able to repossess the goods as they were not kept at the address given in the hire-purchase agreement and could not be located. Therefore, the plaintiff cannot be faulted for non-mitigation of its losses. Moreover, s 75 of the Contracts Act 1950 was irrelevant in this respect as the section refers to liquidated damages and penalty imposed in the contract between the parties in the event of breach; (7) the terms relating to payment of initial deposit, monthly instalments, and interest on overdue rental or other payments form part and parcel of the hire-purchase agreement. The parties had signed on the last page of the agreement. It was vexatious on the defendants' part to say that just because no signatures or initials appeared against the respective clauses, they did not form part of the hire-purchase agreement; (8) the counterclaim by the first defendant related to the plaintiff's claim in the action and also to dealings between the plaintiff and the first defendant trading under the name and style of Borneo Welded Mesh. If there was going to be a counterclaim by Borneo Welded Mesh, there must first be a claim by the plaintiff against it. In this case, Borneo Welded Mesh was a stranger to the action. The counterclaim by the first defendant was clearly vexatious and an abuse of the process of court. The whole counterclaim of the first defendant was without any basis and the court therefore allowed the application of the plaintiff under O 18 r 19 of the RHC; (9) (obiter) the change of name of a company would not absolve it of any rights and obligations before the change took effect. Whatever legal proceedings there were, by or against the company before the change, would not be rendered defective. After the change of name, any legal proceedings pending or which might have been commenced by or against it but for the change of name, may be continued or commenced by or against it by its new name.

MBf Finance Bhd (formerly known as Malaysia Borneo Finance Corp (M) Bhd) v Ting Kah Kuong & Anor [1993] 3 MLJ 73 High Court, Kuching (Abdul Kadir Sulaiman J).

The appellants, incorporated and registered in Singapore on 4 October 1979, were in the business (in Singapore and Indonesia) of importing and distributing communication equipment, computer-related products and accessories. The second respondents, a foreign company, whose business was in oil drilling and exploration, sought to register their name, 'Drilex Systems Inc' in Singapore. The registration was allowed by the Registrar of Companies on the basis that there was no reason to direct the foreign company to change its name since neither s 27 nor s 378 of the Companies Act (Cap 50) ('the Act') applied. The appellants applied to court by way of motion for declarations, inter alia, that 'Drilex Systems Inc' was an undesirable name and that its registration should be set aside, and an injunction restraining the second respondents from using that as their name in Singapore. The High Court disallowed the application and the appellants appealed.

Held, dismissing the appeal: (1) whereas under s 27(1), there are two additional grounds for such refusal, namely, that the name proposed is identical or confusingly similar to the name of another company, corporation or business name; (2) prior to 1984 the reasons for which the Registrar would refuse to allow a particular name were the same for both local and foreign companies; (3) s 27(12) contains a drafting error; (4) s 27(1) applies only to local companies and s 378(1) only to foreign companies; (5) the reservation of names is by reason of s 27(11) compulsory for local companies but not for foreign companies; (6) if foreign companies voluntarily elect to reserve a name, then they are subject to the same scheme of reservation of names in s 27 as local companies are; (7) on the issue of 'undesirability', the fact that in s 27, an 'undesirable' name is treated distinctly from a name that is identical or confusingly similar to the name of an existing company, corporation or business, implies that the fact that confusion of identity might arise is not 'undesirability' for these, and the parallel (though not identical) terms of s 378(1) indicate that 'undesirable' in that subsection must have the same meaning as in s 27(1); (8) notwithstanding the anomalies, the Act as it stands makes it plain that similarity in names is not in itself a sufficient reason for the Registrar to refuse to register a foreign company's proposed name, as it is for a refusal to register a local company's proposed name. There must be something more which renders that similarity undesirable. This may take the conspicuous form of financial detriment, which would be the obvious consequence if the companies involved share a common field of activity, though of course there may well be other clear indications of financial detriment; (9) if the companies do not share a common field of activity, then the presence or absence of financial detriment or any other matter which may render the similarity in names undesirable is an issue which is in its nature amenable to proof, and therefore in our judgment the court is inherently better placed than the Registrar to decide this issue, with evidence and the full facts before it; (10) under s 378 of the Act the Registrar will refuse to register a company's name only if the Registrar is of the opinion that such name is undesirable or is a name, or a name of a kind, that the Minister has directed the Registrar not to accept for registration;on the facts, though the name 'Drilex Systems Inc' is likely to cause confusion with the appellants' name, no financial detriment by way of loss of business is likely to be suffered by the appellants.

Drilex Systems Pte Ltd v Registrar of Companies & Anor [1993] 2 SLR 345 Court of Appeal, Singapore (Yong Pung How CJ, LP Thean and Goh Joon Seng JJ).

The applicant registered her business sometime in July 1979 as 'JC Penny Collections'. Since that date she has been carrying on a business of trading in various items of clothing. However, the name was not on used on the items sold. At that time two trade marks each under the name 'Pennys' for clothing (Class 25) and toys (Class 28) were registered on behalf of JC Penny Co Inc, a company incorporated in the United States of America ('the American corporation'). The American corporation did not use the trade mark in Singapore. On 4 May 1984 the Registrar of Companies and Businesses requested the applicant to show cause why s 11 of the Business Registration Act 1973 should not be invoked against her to direct a change of name. On 13 October 1986 the registrar directed the applicant to change the name of her business pursuant to s 11, in default the registration of her business would be cancelled. The grounds for this were that the American corporation operated retail stores in USA and elsewhere and had registered its trademarks in numerous countries, including Singapore. It was alleged that the applicant was capitalizing on the reputation of the American corporation to deceive the public that they were somehow associated with the American corporation. They logo and colours are alleged to be identical and deliberately designed to mislead US visitors and others who have visited the USA. The applicant appealed to the minister against this decision but the appeal was dismissed. The applicant obtained leave to apply for an order of certiorari to quash the decisions of the minister and the registrar on the grounds that the registrar had not satisfied herself that the name so nearly resembles that of the American corporation so as to be calculated to mislead.

Held, allowing the motion: (1) the registrar must be satisfied as to the state of things prescribed by s 11 before she issued the direction. The applicable provision was s 11(b). Mere resemblance of names is not sufficient for the purpose of s 11(b), it must be calculated to mislead; (2) the test applicable here is an objective one -- whether the registrar had before her any evidence, on the basis of which it could reasonably be said that she was satisfied that the name JC Penny Collections so nearly resembles that of the American corporation as to be calculated to mislead; (3) the registrar was entitled to consider that the American corporation operated retail stores and had registered its trade marks but had failed to consider that these trade marks were not in use, that their registration had expired in September 1983, and that the applicant had not used 'JC Penny' or 'Pennys' as a trade mark on any goods traded by them; (4) by reason of the above, the proprietor could not maintain an action for infringement of trade marks, nor could the proprietor of these trade marks maintain an action for passing-off as the proprietor had not acquired any reputation; (5) there was no evidence that the applicant's logo and that of the corporation were such that they were calculated to mislead. On the totality of the material before the registrar, there is insufficient evidence, which could satisfy the registrar that 'JC Penny Collection' so nearly resembles the name of the American corporation as to be calculated to mislead; (6) the registrar is entitled to have a policy of not permitting unauthorized users of riding on the reputation of foreign corporations and owners of trade marks. However, there is no evidence to support that the applicant was in this category; (7) as the American corporation was not carrying on any business or using its trade marks in Singapore, it therefore had no reputation in Singapore and thus it cannot be maintained that the applicant was riding on its reputation; (8) there is no property in a name and the American corporation cannot claim that the names 'Penny' or 'Penneys' are exclusively theirs.

Tan Gek Neo Jessie v Minister for Finance & Anor [1991] SLR 325 High Court, Singapore (LP Thean J).

P was a locally-incorporated company. D2 was incorporated in California and changed their name to 'Drilex Systems Inc' after a merger. D2 sought to register the change of name with the Registrar of Companies. P opposed this. The registrar nevertheless allowed the registration. P appealed to the High Court.

Held, dismissing the appeal: (1) the Registrar is not prohibited from registering a foreign company under a name that is similar to that of a local company. The regime governing foreign companies' names is different from that which applies to local companies; (2) there was no question of D2 trying to take advantage of P's goodwill as they had a legitimate connection with the name used. The two companies were in different businesses and there was no likelihood of P's business being diverted to D2. Moreover, it would be more inconvenient to require D2 to change their name just in order to do business in Singapore than for P to receive misdirected communications, which was the only prejudice that P suffered. The appeal was therefore dismissed.

Drilex Systems Pte Ltd v Registrar of Companies & Anor [1990] SLR 1055 High Court, Singapore (Chan Sek Keong J).

[Annotation: Affirmed on appeal. See [1993] 2 SLR 345.]

A Chinese loan association was formed consisting of 31 persons. The association was not registered as a limited company under the Companies Ordinance 1889. The shares of the association were 57 in number, of which the plaintiff's wife held two. The defendant was the manager of the association. At the 45th drawing the plaintiff's wife tendered for the loan but it was not granted to her. The plaintiff then commenced an action and claimed to recover from the defendant the amount paid by his wife towards the first 44 drawings, on alternative counts, (i) for money lent by the plaintiff to the defendant, (ii) for money had and received by the defendant for the use of the plaintiff.

Held: (1) the money loan association was not an association for the purpose of carrying on a business that has for its purpose the acquisition of gain, within the meaning of s 4 of the Companies Ordinance 1889; (2) the plaintiff could not recover on either count for money lent, or on the count for money had and received. An application made after the close of the defendant's case, for leave to amend the writ, by the addition of a count for damages for breach of contract, was refused. Held, by the Court of Appeal affirming that (1) the plaintiff could not recover on either the count for money lent or the count for money had and received; (2) it was entirely a matter of discretion for the judge, whether he should or should not allow the amendment after the close of defendant's case, and that his discretion was rightly exercised.

Soh Hood Beng v Khoo Chye Neo [1896] 4 SSLR 115 High Court, Straits Settlements (Leach J).

'The Keppel Bus Co was an association of more than 20 bus-owners carrying on business having for its object the acquisition of gain within the meaning of s 4(2) of the Companies Ordinance (Cap 151, 1936 Ed). The association was not registered under that Ordinance and was therefore an illegal association. The defendants were the manager and treasurer respectively of the association. In an action by a member on behalf of himself and other members except the defendants, claiming an account of all moneys received by the defendants and other relief.

Held: notwithstanding that the association was illegal under the Companies Ordinance, the court was not debarred from affording relief to the plaintiff on behalf of himself and all other members except the defendants by granting an order for accounts.

Soh Ah Suan v Ang Huat Chwee [1937] MLJ 109 High Court, Straits Settlements (Howes Ag CJ).

About 20 years ago, one Soo Wah Heng, now deceased, obtained from the government an estate consisting of 264 acres of land. A partnership was formed in connection with this property. In 1927, the year that Soo Wah Heng died, the number of partners was 31. The two widows of Soo Wah Heng were appointed administratrices of the estate. They mismanaged the property and, in consequence, the defendant company was appointed trustee of the estate. The plaintiffs claimed they were all partners in this estate and that there had been a reduction in the number of partners so that the partnership was no longer illegal.

Held: if the plaintiffs had succeeded in proving that the number of partners had been reduced to less than 20, they would not be entitled to any relief unless they could prove that the formation of the new partnership was free from any taint of illegality.

Tan Chin Cheang & Ors v Estate and Trust Agencies (1927) Ltd 1931 Court of Appeal, Federated Malay States (Elphinstone CJ, Prichard and Mudie JJ).

A magistrate can properly commit a limited company to stand its trial at Assizes.

R v Lee Printing Co Ltd [1937] MLJ 6 High Court, Straits Settlements (Adrian Clark J).

The respondents were one Looi and a company he controlled, Trade Facilities Pte Ltd (Trade Facilities). Looi owned all but one share in Trade Facilities and was the sole directing mind and will behind Trade Facilities. Looi instructed an agent in Tokyo to look for buyers of Hennessy XO in Japan. The actual negotiation was between the agent in Japan and the buyer there, but Looi gave instructions from Singapore as to such things as the price and terms. The Hennessy XO were delivered in Japan. The buyers suspected that the goods were counterfeit and demanded a refund. The buyers also insisted on sending the goods back to the respondents in Singapore. Looi arranged for a letter of credit to be opened by a third party to finance the refund of the purchase price. Trade Facilities was named as the shipper when the goods were sent to Japan. When they were returned, it was named as the consignee and the party to be notified. Its letterhead was also used in the correspondences with the Japanese agent and the buyer. The goods were seized in Singapore on their return before they had gone through customs. There was some evidence that they were meant to be shipped to China. The goods were found to be adulterated Hennessy XO in genuine Hennessy XO bottles. The boxes they were in were genuine but some of the labels and all of the caps were counterfeit. The respondents were prosecuted by private summons for selling and importing goods to which a trade mark had been falsely applied. At the trial before the magistrate, the respondents argued that the sale took place in Japan and that the Singapore courts had no jurisdiction. It was also alleged that the transaction was a sale by consignment. Furthermore, it was contended that the goods had not been imported into Singapore. The respondents alleged that the goods actually belonged to one Chan Ah Kow and that they had no reason to suspect the genuineness of the goods or the trade marks. They sought to rely on the statutory defences. The magistrate held that the goods had been sold in Singapore and that they had also been imported into Singapore. He held that the respondents were not entitled to rely on the statutory defences and convicted them. The respondents were fined. (See Societe Jas Hennessy & Co v Trade Facilities [1994] AIPR 151.) The respondents appealed against conviction and sentence. The complainant cross-appealed against the sentence.

Held, dismissing the appeal of the respondents and allowing the appeal of the complainant: (1) it did not prohibit the sale itself. The prohibition was aimed against the person and the act of selling, and not the transaction of sale or the agreement to sell. Thus, although the word 'sells' must be given its ordinary English meaning, it was the meaning of the word as a verb that was required. A transactional approach therefore had no application so far as s 73 of the Act is concerned. Since s 73 prohibited the act of selling, where the sale took place and where the agreement to sell was made was not conclusive. In fact, whether a sale or an agreement to sell was reached was also not conclusive; (2) the question whether a person 'sells' must be looked at from the point of view of the seller and not the buyer. In order to determine whether a person had sold goods, the court must look at all the circumstances of the case. The approach was the same where the court had to decide where the act of selling had taken place. In deciding these questions, the acts of the person were relevant, not the resulting transactions, if any; (3) on the facts, adopting the ordinary English meaning of 'sell', there was no doubt that Looi had committed the act of selling the goods in question. Looi had admitted to instructing Higa by fax to look for buyers in Japan. When Higa found the buyer, Looi negotiated for the price through Higa. Whether or not the transaction was a sale by consignment was immaterial. Similarly, there was no doubt that Looi had committed the acts of selling in Singapore. All the acts of selling by Looi were carried out in Singapore. Where the contract was concluded in law and where the property passed was not conclusive. Therefore the Singapore courts had jurisdiction. The fact that Higa was also selling in Japan was not material, for both of them could be selling the same goods at the same time. Similarly, even if Looi was acting for Chan Ah Kow, Looi was nonetheless selling even if he was selling as an agent for somebody else; (4) the word 'import' in s 73 of the Act was as defined in s 2(1) of the Interpretation Act, but with the qualification provided in the Act. If the word 'import' in s 73 had meant simply to bring or to cause to be brought into Singapore, then any person who brought into Singapore a counterfeit branded handbag, wallet, watch or the like would have committed an offence under s 73. He or she would then have the burden of proving on a balance of probabilities the defences provided for in s 73. Parliament could not have intended such an absurd result. Section 73 stated that an offence was committed by a person if he 'imports, sells or exposes or has in his possession for sale or for any purpose of trade or manufacture' the offending articles. The section was directed at persons who dealt, in the course of business in goods to which a counterfeit trade mark was applied or to which a registered trade mark was falsely applied. It was not aimed at the consumer who used or merely possessed these goods. Thus it could not be invoked against the same consumer when he brought the offending article into Singapore merely because he happened to have purchased it abroad. Thus, the words 'for sale or for any purpose of trade or manufacture' applied also to the word 'import' in s 73. A person therefore did not 'import' something into Singapore within the meaning of the word in s 73 of the Act unless it was done for the purpose of sale or for any purpose of trade or manufacture; (5) on the facts, Looi had caused the goods returned by the Japanese buyer to be brought into Singapore. The acceptance of the return of goods sold in the course of trade was something done for the purpose of trade. It was a necessary incident of the trade of selling goods. The returned goods had therefore been imported into Singapore for the purpose of s 73; (6) the evidence showed that Trade Facilities was nothing more than the alter ego of Looi. It was nothing more than a vehicle that Looi employed as and when it suited him. All but one of Trade Facilities's shares were held by Looi and the single directing mind behind Trade Facilities belonged to Looi. This was an appropriate case to lift the corporate veil; (7) the fact that the corporate veil had been lifted did not absolve Trade Facilities of all liability. The acts and intentions of a company's managers could be attributed to that of the company. In this case, Trade Facilities allowed itself to be used as a vehicle of Looi's. Thus, when Looi used Trade Facilities to sell and to import counterfeit Hennessy XO, Trade Facilities was just as liable. Trade Facilities was more than a passive employer. On the facts, Trade Facilities had taken an active part in the acts of selling and importing. Therefore, Trade Facilities was also liable; (8) the s 73(b) defence was not limited to inadvertence or mistake of fact. Nevertheless, in order to prove innocence under s 73(b), it was not sufficient to just show an incomplete s 73(a) defence. However, the mere fact that in order to prove a s 73(b) defence, a defendant had to rely on facts which were also elements of a s 73(a) defence, was not by itself a sufficient ground for saying that the s 73(b) defence could not be relied on. Moreover, the mere fact that a defendant could not establish an element of the s 73(a) defence did not mean that he could not have acted innocently. It was permissible in certain circumstances to point to other additional facts which could turn an incomplete s 73(a) defence into a s 73(b) defence; (9) the respondents could not rely on the s 73(a) defence in respect of either of the charges of selling or importing because they had not given all information in their power with respect to the person from whom they got the Hennessy XO to the complainant, despite repeated demands by it. It was not sufficient in the case of goods returned by buyers to just provide the complainant with information about the buyer who rejected the goods. The seller accepting the return of the goods must provide information about the person he got the goods from in the first place; (10) as for the s 73(b) defence, the mere fact that Looi was acting as an agent was not something that could be used to show innocence when Looi had consciously refused to provide information about his principal to the complainant. The fact that one was a mere agent was not something that could be used to establish innocence when the agent had failed to give all the information in his power with respect to the principal to the complainant when so demanded. Apart from the allegation that Looi was an agent of Chan, there was no additional fact which could establish innocence. That being the case, the respondents' s 73(b) defence was nothing but an incomplete s 73(a) defence. The respondents had therefore not satisfied the court that they have acted innocently; (11) where a seller sold goods to an overseas buyer which was discovered to be counterfeit, and the seller was able to establish a defence to the original act of selling, he could normally be said to act innocently when he imported the same goods back to Singapore because the foreign buyer had rejected the goods. The fact that when he imported those goods he now had reason to suspect the genuineness of the trade mark was not sufficient by itself to defeat the defence of innocence; (12) on the facts of this case, the primary reason why the respondents could not establish a defence to the charges of selling the goods was that they had refused to provide all information in their power about the source of the counterfeit goods. This refusal sufficiently tainted the subsequent import so that, in relation to the import, when the respondents persisted in failing to provide the information asked for by the complainant, they could not avail themselves of the defence of innocence. In the absence of some special circumstance, this was so even if, at the time of the original act of selling, the seller had taken all reasonable precautions and had no reason to suspect the genuineness of the mark. There was no such special circumstance here. In this case, this failure was fatal to the s 73(b) defence with relation to the charge of importing; (13) taking into account the seriousness of the case and the manner in which the respondents have conducted the defence, a custodial sentence should be imposed on Looi. Therefore, in addition to the fines already imposed, Looi was sentenced to three months' imprisonment for the offences of selling and importing the goods respectively. The sentences were to run concurrently; (14) s 73 provided that any person who 'sells' committed an offence;(per curiam) although the element of providing information about the person from whom the defendant obtained the goods, when requested for by the complainant, was not an indispensable element of the s 73(b) defence, it was nonetheless often of great importance. Only exceptional facts could displace this element of innocence, even in respect of the s 73(b) defence.

Trade Facilities Pte Ltd & Ors v Public Prosecutor [1995] 2 SLR 475; (1995) CSLR I[139] High Court, Singapore (Yong Pung How CJ).

The manager of a company was charged with failing to pay provident fund contributions. He was convicted and fined. On appeal,

Held: the manager or other officer of a corporate body is not liable unless he was personally at fault by some negligence or omission in the performance of his duties.

Pillay v Public Prosecutor [1965] 1 MLJ 35 High Court, Kuala Lumpur (Ong J).

In this case the appellant, a corporation, had pleaded guilty to a pollution offence and had been convicted and fined $10,000. The learned magistrate further sentenced to one day's imprisonment the factory manager, who represented the appellant at the hearing. An appeal was lodged against this order of one day's imprisonment. The learned magistrate purported to act under s 99A of the Subordinate Courts Act 1948 and para 20 of the Third Schedule thereto.

Held, allowing the appeal: the powers set out in the Third Schedule of the Subordinate Courts Act 1948 can be exercised only in the manner prescribed by a written law. The learned magistrate had misapplied the law and the sentence of one day's imprisonment set aside.

Dunlop Malaysian Industries Bhd v Public Prosecutor [1985] 1 MLJ 313 High Court, Seremban (Peh Swee Chin J).

The applicant company had been convicted of the offence of knowingly being in possession of certain prohibited goods and had been fined $1,620. Its appeal against conviction was dismissed by the High Court. Thereupon application was made by the company to refer the following questions of law to the Federal Court: (a) Whether a limited company charged under s 135(1)(d) of the Customs Act 1967 (Act 235) can be guilty of such criminal offence without proof of mens rea of its agent or officers. (b) If the answer to (a) is in the negative, whether it is relevant to consider the relative importance of the agents or officers of the limited company whose knowledge is to be imputed to the company.

Held: (1) as mens rea was essential for proof of guilt in this case, the limited company could not be guilty of the offence without proof of mens rea of its agents or officers; (2) the persons whose knowledge would be imputed to the company would be those who were entrusted with the exercise of the powers of the company; (3) (per Ong CJ and Ong Hock Sim FJ, Gill FJ dissenting) although the questions referred had been rightly answered by the learned judge who referred the case to the Federal Court, the Federal Court could exercise its power of review and interfere with the decision of the learned judge, if it was satisfied that that decision was wrong.

Yue Sang Cheong Sdn Bhd v Public Prosecutor [1973] 2 MLJ 77 Federal Court, Kuala Lumpur (Ong CJ, Gill and Ong Hock Sim FJJ).

The respondents entered into 12 sale and purchase agreements as `Trustees for and on behalf of Zion Gospel Mission Ltd' (Zion Gospel) to purchase residential properties from the vendors. Zion Gospel required a ministerial licence under s 23 of the Companies Act (Cap 50) to hold land. Although the vendors knew that the respondents intended to convert the use of the properties to use as a church, kindergarten and child care centre, it was expressly agreed that the sales were not subject to approval being obtained for change of use. The respondents paid deposits of 10% of the total purchase price. The respondents' solicitors sent to the vendors' solicitors, Bee See & Tay, forms DC2(CU) and DC10. The forms were returned unsigned. The respondents alleged that they required approval for change of use before they could obtain a ministerial licence under s 23(2) for Zion Gospel to hold land. They further alleged that by refusing to sign the forms, the vendors had repudiated the contracts by breaching an implied term that the vendors would cooperate with the respondents to obtain the ministerial licence. Bee See & Tay, as stakeholders, paid out the deposits to the vendors when the respondents failed to complete the purchases. The respondents sued Bee See & Tay and the vendors, claiming the return of the deposits. The vendors counterclaimed for a declaration that the deposits were rightly forfeited. The judicial commissioner allowed the respondents' claim and dismissed the counterclaim (see [1996] 3 SLR 156). Bee See & Tay and the vendors appealed in separate appeals.

Held, allowing both appeals: (1) when the options were granted to the trustees `for and on behalf of Zion Gospel', what was clearly contemplated was that the transfer of the legal titles may be made to the trustees, but the beneficial interests vested in Zion Gospel. To that extent only, the trustees could be said to be entering into the contracts on behalf of Zion Gospel. The trustees acted as principals, not as agents; (2) a plain reading of s 23 as a whole led to the conclusion that sub-s (2) dealt with the question of capacity, and not legality; (3) the vendors' position was simply that the properties were sold as residential properties, and hence they were entitled to require the respondents to complete the purchases on the basis that they were to be used as residential properties. Regardless of how unreasonable this may seem to the respondents, considering that the vendors knew the respondents' intended use for the properties, it was a position that the vendors were entitled to take. This was simply because that was the basis on which the parties entered into the sale and purchase contracts; (4) there was no room to imply any term that the vendors would cooperate with the respondents in getting planning approval for change of use. Such a term would go against the very tenor of the contracts, which was that the properties were sold `as is', and without any proviso or condition as to approval for change of use being obtained; (5) Zion Gospel, and hence the respondents, could not rely on their lack of capacity to take a transfer of property as against the vendors. The vendors were not concerned with Zion Gospel's lack of capacity. It could not be asserted by or against them and the transfer would not be invalidated. Implying such a term as the respondents alleged would be tantamount to ignoring s 25 altogether; (6) a transfer to trustees would not be invalid because of the absence of a s 23(2) licence. The trustees could not object to the transfers being made to them because they contracted as principals; (7) (per curiam) the court was not in any way saying that no action may be taken against the officers of a company or the company under the Companies Act if they chose to employ the device of a trust in an attempt to get around s 23(2).

Bee See & Tay v Ong Hun Seang & Ors (trustees of Zion Gospel Mission Ltd) & another appeal [1997] 2 SLR 193 Court of Appeal, Singapore (Yong Pung How CJ, Karthigesu and LP Thean JJA).

X Sdn Bhd, the registered proprietor of the land in question, granted a power of attorney to D to enable the latter to create a charge over the land. Pursuant to the power of attorney, D created a charge over the land in favour of P to secure a loan granted by P to them. After the creation of the charge, X Sdn Bhd transferred the land to D. D defaulted in payment of the instalments due to P. Upon the failure of D to comply with the statutory notice issued under s 255 of the National Land Code 1965, P applied for an order for sale of the land pursuant to ss 256 and 257 of the Code. D opposed the application on a number of grounds. D contended, inter alia, that the charge was void as it was executed in excess of the powers granted to them by X Sdn Bhd. D also contended that they were not bound by the charge which was created in the name of X Sdn Bhd. Another ground relied upon by D was that the memorandum and articles of assocition of X Sdn Bhd did not authorize X Sdn Bhd to appoint any other coporation as its attorney to execute a charge of its property for the benefit of a third party. Held, allowing P's application: (1) in the instant case, the charge was validly created pursuant to the power of attorney granted to D. D did not exceed their powers in creating the charge; (2) P was entitled to enforce the charge against D as if D was a party to the charge by virtue of s 216(1)(a). This is so because of the concept of articles and memor-andum of association did not prohibit the creation of the charge. It is an incident of management for a company to carry out its functions by an attorney and there is no necessity for it to be specifically empowered to do so by its articles of assocition. In any event, s 20(1) of the Companies Act 1965 provides that no act of a company, including any act done by its agent under any purported authority, and no transfer of property, real or personal, to or by a company shall be invalid by reason only of the fact that the company was without capacity or power to do the act or to execute or take the transfer; (4) as D had failed to discharge the onus placed on them by s 256(3) of the Code, P's application was allowed by the court.

Malayan United Finance Bhd v Poly Plastics (M) Sdn Bhd (1990) CSLR XVI[127] High Court, Johore Bahru (Richard Talalla JC).

These were two appeals from the judgment of the Federal Court of Malaysia ([1964] MLJ 416) which allowed the appeal of one Schmidt from a judgment of Hashim J. The matters arose out of prospecting permits over certain state land in Johore. In 1953, one Tan applied to the government of the State of Johore for a prospecting permit for iron ore. He was assisted in the negotiations by Schmidt, a consulting engineer. A prospecting permit No 10/53 was granted to Tan in November 1953 and in December 1953 Tan wrote to Schmidt stating that Schmidt was to be paid 1% of the selling price of all ore that might be sold from any portion of the said land and this was in payment for the work Schmidt had done in assisting to obtain the prospecting permit and for any work that Schmidt might do in assisting to have mining operations started up. Tan then executed a power of attorney in favor of Schmidt which conferred upon Schmidt widely expressed powers to contract for the disposal of any of Tan's mining properties on such consideration and subject to such conditions as Schmidt thought proper. The appellant company was incorporated on 27 July 1954 with a view to taking over the benefit of Tan's prospecting permit Ð Schmidt and Tan being the first directors of the company. On 31 July 1954, an agreement was entered into between Tan and the company (hereinafter called the '1954 agreement') and it was executed on behalf of Tan by his attorney, Schmidt, acting under the aforesaid power of attorney. The 1954 agreement provided that the company should prospect and work the land included in prospecting permit No 10/53 and it was also provided that the company should take over Tan's obligation to pay Schmidt 1% of the selling price of all ore that might be sold from such land. The 1954 agreement was adopted on behalf of the company at a meeting of its directors on 31 July 1954. Sometime in September 1955, a further agreement (hereinafter called the '1955 agreement') was made between the company and Schmidt. Under cl 1 of the agreement the company, inter alia, agreed to pay Schmidt 1% of all ore that might be won from any land comprised in the 1954 agreement in 'consideration of the services by the consulting engineer for and on behalf of the company prior to its formation, after incorporation and for future services'. The 1955 agreement was signed by Schmidt and the seal of the company was affixed to it in the presence of Tan and one Ironside who signed as a proxy for one Marjoribanks who was a director of the company. In December 1955, an additional prospecting permit No 3/55 was granted to Tan from 27 July 1954 to March 1976. Prospecting was carried out on the lands under prospecting permits 10/53 and 3/55. Workable deposits of iron ore were discovered but it became apparent that additional capital was required. Therefore on 4 August 1953, a meeting of the directors of the company was held which was attended by the third party appellant Jagatheesan (hereinafter called the said Jagatheesan) and it was resolved that 315,000 shares of $1 each in the company should be allotted to the said Jagatheesan and his associates and the allotment was carried out. Disputes soon arose between those originally interested in the company and the third party appellants as a result of which an originating motion was filed by one Lim, a holder in the company with the third party appellant, the company and one Smith as the respondents to the motion. The relief sought was that the register of the company be rectified by removing the names of the third party appellants and the said Smith as shareholders. The motion came before Sutherland J in March 1957 and after the hearing had commenced a compromise was arrived at by the parties. This compromise was embodied in a consent order on 27 March 1957 which, inter alia, provided that (a) the register of the company be rectified by deleting the names of the third party appellants and the said Smith as shareholders, (b) the company was ordered to grant to the third party appellants a sublease of the land included in the prospecting permits. The consent order also provided in cl 10 that the 1954 agreement shall be taken over by the third party appellants and their nominees who shall indemnify the company against all claims which may be made against the company thereunder. A draft of this consent order was approved by the directors of the company (at which date Schmidt was still a director) in May 1957. Schmidt was dismissed from office as managing director and subsequ ently ceased to be a director in August 1959. He commenced the present proceedings in July 1959 claiming an account of all moneys payable to him under the 1954 agreement, the 1955 agreement or one or other of them. The company counterclaimed alleging breach of his duty as managing director in failing to bring the existence of the 1955 agreement to the notice of the company's legal adviser and claiming damages to the extent of any sums payable to Schmidt under the 1955 agreement. The company also issued a third party notice against the third part y appellants claiming under the terms of the consent order to be indemnified by the third party against all liability to Schmidt under the 1954 agreement or the 1955 agreement. Hashim J dismissed the action and held that the evidence did not establish that the seal of the company had been affixed to the 1955 agreement on or after 1 October 1955 so that it was not validly executed in accordance with the articles of association of the company. The Federal Court reversed the decision of the trial judge and ordered the company to pay Schmidt $251,529.50 and that the company should be indemnified by the third party appellants. On appeal,

Held: (1) the date appearing on the face of the 1955 agreement was prima facie evidence that it was executed on that date. The onus of proof lay on those who sought to establish that it was in fact executed on a different date to do so and since there was ample evidence to show that the seal could have been fixed only after 1 October, the Federal Court was bound to reach a conclusion different from that of the trial judge; (2) cl 1 of the 1955 agreement established a legally sufficient consideration moving from Schmidt. Services prior to the company's formation could not amount to consideration as they could not be rendered to a non-existent company, nor could the company bind itself to pay for services claimed to have been rendered before its incorporation. But the inclusion of that ineffective element did not prevent the other two elements or one of them, from constituting valid consideration. Services rendered after incorporation but before the date of the agreement validly amounted to consideration for an agreement to pay under s 2(d) of the Contracts (Malay States) Ordinance 1950. There was no doubt that such services were rendered; (3) the 1955 agreement was not void for uncertainty because it stated that the tribute of 1% should be calculated 'on the selling price of the ore as shown in the company's records' because this was clearly a case where an expression on the face of it possibly lacking in definition can be attributed a certain meaning by evidence as there was no difficulty in showing what price was referred to in the clause; (4) the 1955 agreement was not discharged by novation because Schmidt was not a party to the consent order; (5) the power of attorney from Tan to Schmidt was wide enough in its terms to permit Schmidt to enter into the 1954 agreement on behalf of Tan. However, the 1954 agreement was not enforceable by Schmidt against the company, as he was not a party to it in his personal capacity; (6) cl 10 of the consent order contemplated the existence of an obligation from the company to Schmidt, and as a whole must be read as referring to the 1954 agreement as supplemented or superseded by the 1955 agreement, so as to introduce a direct obligation by the company to pay Schmidt the 1%. Therefore, the third parties were obliged to idemnify the company against Schmidt's claim.

Kepong Prospecting Ltd & Ors v Schmidt [1968] 1 MLJ 170 Privy Council Appeal from Malaysia (Lord Guest, Lord Wilberforce, Lord Pearson, Sir Douglas Menzies and Sir Alfred North).

The plaintiffs, who are registered proprietors of various proportions of undivided shares in a piece of land in Selangor Darul Ehsan ('the land'), agreed to sell their respective undivided shares which amounted to approximately 70% of the land to the defendants. There were two sale and purchase agreements ('the agreements') and 10% of the purchase prices were paid to the plaintiffs. The plaintiffs also granted irrevocable powers of attorney to the defendants for the purpose of partitioning the land into two portions; one representing the portion owned by the plaintiffs and the other for the minority co-proprietors. The agreements stated that the completion date was six months from the date of the agreements or on the date when the issue document of title to the partitioned land was issued. The disputes arose as the application for the partitioning of the land took more than two years and the defendants had attempted to sell their beneficial rights in the land to a third party. The plaintiffs alleged that the defendants had breached the agreements by, inter alia: (i) selling the land to a third party; (ii) not being bona fide purchasers; (iii) having purposely delayed the process of partitioning; (iv) not being incorporated when the first sale and purchase agreement was entered into; (v) representing to the plaintiffs through a solicitor, Mr Xavier, that the purchase price would be paid within six months from the date of the agreements; and (vi) not informing the plaintiffs that the land was to be compulsorily acquired by the State Government of Selangor. The defendants, on the other hand, counterclaimed for specific performance on the ground that the arbitrary termination of the agreements by the plaintiffs was invalid.

Held, dismissing the plaintiffs' claim and allowing the defendants' counterclaim: (1) a purchaser derives beneficial ownership in land when the sale and purchase agreement for the sale of land is concluded. There is no need for the full balance of purchase price to be paid for beneficial ownership to exist. The defendants as assignees of the plaintiffs' shareholding in the land had the right to sell off their beneficial ownership to a third party. The defendants' powers of attorney were not utilized, instead the selling was in their own capacity as beneficial owners of the land; (2) in a contract of sale, the question whether a defendant is a bona fide purchaser is irrelevant where there exists no fraud or misrepresentation. What is important is that the agreement contains the fundamental elements, which are voluntary offer and acceptance, followed by valuable consideration paid to the plaintiffs; (3) from the evidence, there was no deliberate delay in securing the partitioning of the land. In fact, the defendants expedited the process by purchasing an adjoining piece of land with road frontage to secure an access to the land, as was requested by the authorities prior to the approval of the partitioning; (4) when the first sale and purchase agreement was executed, the defendants were not in existence. However, the agreements were subsequently ratified under s 35 of the Companies Act 1965. Also, the plaintiffs were estopped from raising this issue as they had until just before the trial, accepted the defendants as a legal entity in the first sale and purchase agreement; (5) there was no uncertainty in the terms of the agreements and it was clear that the main objective of the parties in the agreement was for the completion of the sale to take place after the land was partitioned; (6) Mr Xavier was the plaintiffs' solicitors, therefore, any representation made by him to the plaintiffs was a matter entirely of no concern to the defendants. Also, there has never been any official notification of the acquisition of the land by the State Government of Selangor; (7) as the defendants' counterclaim for specific performance was allowed, the counterclaim for special damages was not allowed because no actual loss was suffered. There was also no evidence of the losses suffered under general damages.

Ahmad bin Salleh & Ors v Rawang Hills Resort Sdn Bhd [1995] 3 MLJ 211; (1995) CSLR III[254] High Court, Shah Alam (James Foong J).

This was an appeal from the decision of the Court of Appeal, Singapore reported in [1978] 1 MLJ 3. The learned trial judge in this case was asked to determine two preliminary questions as a matter of law. The first was whether a letter signed by 12 persons including the respondent constituted a pre-incorporation contract between the respondent and the 11 persons as agents for the appellant company which was subsequently incorporated, under which the respondent was constituted managing director for life. The second was whether if that letter constituted such a contract, the said contract was ratified by resolutions of the appellant's directors. The learned trial judge answered both questions in the negative but on appeal the Court of Appeal held that the substance of the said letter fell within the ambit of s 35(1) of the Companies Act (Cap 185, 1970 Ed) and that there was a pre-incorporation contract which was duly ratified by the resolution of the directors. The appellant appealed.

Held, dismissing the appeal: the letter fell within the provisions of s 35(1) of the Companies Act and the pre-incorporation contract was subsequently ratified by the resolution of the directors.

Cosmic Insurance Corp Ltd v Khoo Chiang Poh 1980 Privy Council Appeal from Singapore (Lord Edmund-Davies, Lord Fraser of Tullybelton, Lord Scarman, Lord Roskill and Sir Garfield Barwick).

[Annotation: Decision of the Court of Appeal in [1975-77] SLR 242; [1978] 1 MLJ 3 affirmed. For subsequent proceedings see Khoo Chiang Poh v Cosmic Insurance Corp Ltd (No 2), Suit No 203 of 1974 (Unreported; digested in Walter Woon, Company Law (Longmans, 1988) at p 172).]

The trial judge was invited by counsel for both parties to decide on two preliminary issues. The first was whether a letter signed by 12 persons including the appellant constituted a pre-incorporation contract between the appellant and the other 11 persons, as agents for the respondent company which was subsequently incorporated, under which the appellant was constituted managing director for life. The second issue was whether the contract had been ratified by resolution of the defendant company's directors. The trial judge answered both questions in the negative. The appellant appealed.

Held, allowing the appeal: (1) the letter clearly set out the agreement which had been reached that the appellant should be the managing director for life; (2) the pre-incorporation contract had been ratified by the resolution of the company; (3) the substance of the letter fell within the ambit of s 35(1) of the Companies Act and was duly ratified by the said resolution.

Khoo Chiang Poh v Cosmic Insurance Corp Ltd 1975 Court of Appeal, Singapore (FA Chua, Choor Singh and AP Rajah JJ).

Thai Hwa Realty Sdn Bhd v Ketua Pengarah Hasil Dalam Negeri (1996) CSLR III[255] High Court, Malacca (Suriyadi J).

It is not sufficient that promoters and directors of a company or partnership or persons standing in a fiduciary relationship should have purchased for themselves property of the company or partnership, or of which they are the trustees, at its actual market value; it is also necessary that they should have done so with the full knowledge and consent of the shareholders, partners, or cestuis que trustent, and have first placed themselves actually at arm's length from the vendors; otherwise the shareholders, partners or cestuis que trustent are entitled to follow their property and recover it back for themselves. Such promoters, directors or trustees are bound to disclose all information they may acquire as to the property, to the shareholders, partners or cestuis que trustent, and to give them the fullest explanation relating to it. If such promoters, etc, purchase such property without acting as above stated and afterwards sell it to third parties who had notice of their position and circumstances, and then repurchase it for themselves at a higher figure, they will not be allowed to deduct as against the shareholders, etc, the amount they so paid in excess of the sum they had sold it for. Under these circumstances the shareholders etc, are entitled to follow and recover back the land in the hands of the promoters, etc.

Habib Abdul Rahman v Abdul Cader [1886] 4 Ky 193 High Court, Straits Settlements (Sherriff J).

This action concerned three civil suits, civil suit No 204 of 1986 ('the first suit'), civil suit No 96 of 1986 ('the second suit') and civil suit No 1084 of 1986 ('the third suit'), which have been consolidated. At the trial, however, the second suit was not proceeded with. In the third suit, Allied Capital, a private limited company incorporated in Malaysia, brought an action against the secretary of the Raintree Club ('the Club') as the registered officer of the Club. It was alleged that by a written agreement dated 24 August 1982 ('the agreement') entered into between Allied Capital on one part, and Tengku Abdullah and Gen Yusoff, both acting for and on behalf of the Club on the other part, it was agreed that the plaintiff would sell to the Club shares in Raintree Development for the sum of RM47m. Allied Capital alleged that the Club failed to pay the remaining sum of RM8,408,997. While admitting the purchase of the shares for RM47m, the defendant contended that the Club had been induced into the agreement under the undue influence of Allied Capital. The defendant stated, inter alia, that at all material times, Tengku Abdullah and Gen Yusoff were the major shareholders of Allied Capital and Raintree Development. The defendant counterclaimed and contended that the true value of the shares was only RM24,597,162 and that the defendant was entitled to counterclaim the sum of RM16,571,734 being the difference between the amount paid and the actual value of the shares. The plaintiffs in the first suit were suing on behalf of themselves and all other members of the Club except the defendants, arising from the said agreement. The plaintiffs' claim against the first to the fourth defendants (which included Tengku Abdullah and Gen Yusoff) was for damages for breach of fiduciary duty as promoters of the Club while the claim against all nine defendants was for damages for their breach of duty to exercise due care, skill and diligence. The defendants, however, argued that the plaintiffs were incompetent in law to bring a representative action within the meaning of O 15 r 12 of the Rules of the High Court 1980 ('the RHC'), as the plaintiffs were not members of the Club as at 24 August 1982, when the cause of action was alleged to have accrued. It was also said that the plaintiffs were not and had never been the public officers of the Club within the meaning of s 9(c) of the Societies Act 1966. The defendants also submitted that any cause of action based on breach of fiduciary duty did not accrue to the plaintiffs as they were not members of the Club at the material time. In any case, they argued that promoters of a Club have no fiduciary relationship with the members of the Club they sought to promote. The key issues which arose were: (i) whether the first suit was properly brought before the court; (ii) the membership of the Club at the relevant time; (iii) whether the defendants in the first suit were promoters of the Club and owed a fiduciary duty to the Club; (iv) whether there was a breach of the fiduciary duty, if any, owed by the defendants to the Club; and (v) whether the Club was induced to enter into the agreement under the undue influence of Allied Capital.

Held, allowing the plaintiffs' claim in the first suit but dismissing Allied Capital's claim and allowing the defendant's counterclaim in the third suit: (1) it was not disputed that the Club did not have a public officer at the material time. However, a person may commence a legal action in the capacity of his individual right as a member of a society. As such, the plaintiffs in the first suit were competent to bring the suit in a representative capacity even though none of them was a public officer of the Club; (2) it could not be said that when the agreement was executed, the defendants were the only members of the Club, whereas none of the plaintiffs was then a member and thus not competent to bring the first suit. On the available documentary evidence which must prevail, the Club was only registered under the Societies Act 1966 on 20 January 1983, and thus, the defendants could not have become full members of the Club as at 24 August 1982, when the agreement was executed; (3) a fiduciary relationship exists not only in relation to a company but also between two persons, such as when one person entrusted to another the negotiation of a contract on his behalf or for his benefit and relied on the other to procure for him the best terms available. In the circumstances, there was a fiduciary relationship between the promoters of the Club and the Club and/or the members of the club; (4) the question whether a person was or was not a promoter was one of fact to be decided by the court. All the nine defendants in the first suit were the promoters of the Club, as they were the members of the protem committee who were appointed to take the necessary steps to obtain the registration of the Club. They were thus in fiduciary relationship with the Club; (5) the first to fourth defendants in the first suit were in effect the vendors as well as the purchasers of the shares of Raintree Development, and also the promoters of the Club. Although they had declared their interest in Allied Capital, they, as promoters of the Club, could not run away from their fiduciary duty to the Club. In the circumstances of the case, each of the defendants had an interest either as shareholder, director or employee of the companies owned by Tengku Abdullah and Gen Yusoff, or the Ayala Group with which Tengku Abdullah and Gen Yusoff worked closely in mooting the idea of the Club. When the protem committee resolved to purchase the shares in Raintree Development for RM47m, all the defendants were not in a position to act impartially. There was no independent and intelligent judgment on the transaction to purchase the shares. The promoters were biased and nothing was done to protect the interests of the Club. On the relevant evidence adduced in the first suit, the defendants had been in breach of their fiduciary duty to the Club; (6) since there had been a breach of the fiduciary relationship between the defendants and the Club, the rights of the members of the club were affected. All the members of the Club, including present members were liable to pay the purchase price of the shares. The plaintiffs were thus entitled to bring a representative action under O 15 r 12 of the RHC. All the persons who were represented by the plaintiffs have the same common interest in bringing the action; (7) the defendants in the first suit, as promoters of the Club, had failed to exercise due care, skill and diligence in the exercise of their duty in promoting the Club. They failed to get independent advice on the value of the shares and were only concerned in promoting their own interest; (8) a contract is said to be induced by undue influence where the relations subsisting between the parties were such that one of the parties was in a position to dominate the will of the other, and used that position to obtain an unfair advantage over the other. Where one party stood in a fiduciary relation to the other, that party was deemed to be in a position to dominate the will of the other. In this case, the plaintiff in the third suit was deemed to have exercised undue influence over the Club in the execution of the agreement; (9) the value of the shares as at 24 August 1982 was RM25,718,000. As the Club had paid RM41,168,876, judgment should be entered on the defendant's counterclaim for the difference of RM15,450,876 to be refunded.

Mohd Latiff bin Shah Mohd & Ors v Tengku Abdullah ibni Sultan Abu Bakar & Ors and other actions [1995] 2 MLJ 1 High Court, Kuala Lumpur (Zakaria Yatim J).

[Annotation: Affirmed on appeal. See [1996] 2 MLJ 265.]

Tan Keh Ho v Telipok Lumber Industries Sdn Bhd & Ors Petition No K 26-01 of 1993 High Court, Kota Kinabalu (Ian Chin J).

See companies and corporations, Vol 3, para xxx.

P was the director and majority shareholder of D1, a company. P requisitioned for the convening of an extraordinary general meeting ('EGM') of D1. The resolutions to be passed at the EGM were firstly to remove D2 and D3 as directors of D1 and secondly to appoint X, Y and Z as D1's directors. P appointed A and B as his proxies for the EGM. Both A and B were not members of D1. After the EGM was called to order, D2 who was the chairman of the EGM, adjourned it without the consent of the meeting. D2 and D3 then left the meeting. A and B remained behind and proceeded with the EGM. At the continuation, X, Y and Z were appointed as directors of D1. The parties consented to the following questions to be decided by the High Court: (1) whether P's appointment of A and B as proxies for the EGM was valid; (2) whether D2 as chairman at the EGM had the power to adjourn the EGM; (3) if answer to question 2 is in the positive, whether D2 had properly exercised such power; (4) if answer to question 2 or 3 is in the negative, whether the EGM could be continued; and (5) if answer to question 4 is the positive whether the resolution passed at the EGM appointing X, Y and Z as D1's directors was valid.

Held: (1) the subject matter of s 149(1)(b) of the Companies Act 1965 is the qualification of a person who is not a member of the company who can be appointed as a proxy. To exclude the operation of s 149(1)(b), D1's articles of association must make a contrary provision. Since D1's articles do not provide for a contrary provision, s 149(1)(b) applies; (2) under s 149(1)(b) of the 1965 Act a person who is not a member of the company cannot be appointed a proxy unless he is an advocate, an approved company auditor or a person approved by the Registrar of Companies. X was a company auditor and his appointment was thus valid. The appointment of Y was, however, invalid because he was neither an advocate, an approved company auditor nor a person approved by the Registrar of Companies; (3) D2 as chairman of the EGM did not have the power to adjourn the EGM. Question 2 is answered in the negative and question 3 therefore does not arise; (4) since the adjournment of the EGM was invalid, the EGM could be continued; (5) in the circumstances of this case, the continued EGM with the presence of A, the only valid proxy of P, was a 'meeting'. There was a quorum at the commencement of the EGM and A was the proxy of D1's majority shareholder. D2 must have sensed that the EGM had taken a turn which he did not like and he adjourned it in violation of his duty as chairman. The resolution appointing X, Y and Z as D1's directors was therefore a valid resolution.

Tan Guan Eng v BH Low Holdings Sdn Bhd & Ors and other actions 1992 High Court, Penang (Wan Adnan J).

At the annual general meeting of the defendant company, the first and second plaintiffs were present and voted against a resolution, which was carried. The third plaintiff was not present, but was represented by a proxy, whose vote against the resolution was wrongly rejected. Had this vote been accepted the resolution would still have been passed. Certain other proxies were rejected on the ground that the appointee's substitute had attested the signature of the appointer. At the meeting the appointee was present and consequently his substitute's provisional appointment never materialized.

Held: (1) the wrongful rejection of the third plaintiff's proxy gave rise to a grievance common to all the shareholders who had voted against the resolution entitling the plaintiffs to sue in a representative capacity on behalf of such shareholders; (2) the proxies attested by the appointee's substitute were invalid and rightly rejected.

Lee Eng Hock v Malay-Siamese Prospecting Co Ltd [1935] MLJ 63 High Court, Federated Malay States (Howes J).

Lim Hean Pin v Thean Seng Co Sdn Bhd & Ors [1992] 2 MLJ 10 High Court, Penang (Edgar Joseph Jr J).

The second and third applicants had been appointed by court as receivers to manage and assume the duties of the directors of the first applicant. They were ordered by the industrial court to be joined as parties to the action against the first applicant after dismissing a preliminary objection that leave had to be obtained before action could be taken against receivers. The applicants applied for an order of certiorari to quash the decision of the industrial court.

Held, allowing the application: (1) leave is required before action is commenced against receivers. The industrial court had erred in law making the order that no such leave was required; (2) receivers should not be sued in their personal capacities as it is unjust to make receivers appointed by court and who have to work subject to the directions of the courts and the Central Bank personally liable for their actions. The industrial court was therefore wrong in making the second and third applicants parties in the action.

Co-operative Central Bank Ltd (in receivership) & Ors v Industrial Court of Malaysia & Ors [1994] 2 MLJ 285; CSLR XVII[580] High Court, Kuala Lumpur (Abu Mansor J).

Aidigi Sdn Bhd ('Aidigi') agreed to construct for Emar Sdn Bhd ('Emar') a housing project on a piece of land. The land which belonged to Emar, had earlier been charged to Perwira Habib Bank Bhd ('Perwira') as security for Perwira's loan to Emar. Upon Emar's default in paying Aidigi for work already done, Emar entered into two agreements with Aidigi on 20 October 1986 ('the first and the second settlement agreements). The first settlement agreement provided for, inter alia, Emar to pay certain sums of money to Aidigi and its creditors and to transfer completed houses to Aidigi's contractors in lieu of cash in the aggregate value of M$2.75m. Under the second settlement agreement, Emar agreed to transfer to Aidigi or its nominees, 20 completed houses ('the 20 houses'). The second settlement agreement also deemed Aidigi to have sold all its specified materials, plants and chattels ('the chattels') to Emar in consideration for Emar's promise to complete work on the 20 houses within a stipulated date. Upon Emar's failure to complete work on the 20 houses, the second settlement agreement provided for Emar to pay to Aidigi liquidated damages. The 20 houses were subsequently the subject matter of sale and purchase agreements executed between Emar and Aidigi's nominees pursuant to the second settlement agreement. Emar then created a debenture over its assets in Perwira's favour on 27 November 1986 ('the first debenture'). Two other debentures in Perwira's favour were also subsequently created by Emar. Perwira by a notice dated 13 June 1987 ('the notice') demanded Emar's repayment of a certain sum within 24 hours from the date of the notice. The notice was only served on Emar on 16 June 1987 but earlier on 15 June 1987, Perwira appointed receivers and managers ('the receivers') for Emar pursuant to powers conferred by the first debenture. The receivers with money advanced by Perwira, completed the housing project. The receivers had made some payments from Emar's funds to Perwira. Perwira also imposed interest, inter alia, on the redemption sum in respect of the 20 houses. Aidigi brought an action in the High Court against Emar and Perwira. The judge ordered against Emar, inter alia, the following: (a) the 20 houses to be transferred by Emar to Aidigi under the second settlement agreement; (b) Emar to redeem the 20 houses under the charge by paying Perwira; and (c) Emar to pay Aidigi damages for delay in the delivery of the 20 houses. The judge also ordered against Perwira, inter alia, the following: (a) a declaration that the three debentures were void on three grounds, namely, Emar's resolution authorizing the execution of the first debenture was not properly passed, Emar's directors did not know the nature, terms, conditions and effect of the first debenture and they were forced to sign the first debenture as a result of economic duress; (b) a declaration that the appointment of the receivers under the three debentures was invalid; (c) Perwira was not entitled to impose any interest in respect of the 20 houses after 14 June 1987; (d) Perwira to pay Aidigi interest on the sum of M$2.75m; and (e) Perwira to pay Aidigi damages for delay in the delivery of the houses. The judge also held that even if the three debentures were valid, the appointment of the receivers was bad in law because the notice did not comply with the requirement of the first debenture. This was because by the time the notice was served on Emar, the receivers had already been appointed and Emar was therefore not given the stipulated 24 hours to pay the sum demanded by Perwira. After the judge had made the orders dated 6 September 1991, the judge made additional orders against the receivers personally in his grounds of judgment dated 19 November 1991. The orders against the receivers who had not been sued in their personal capacity were, inter alia, the following: (a) all the money paid by the receivers from Emar's account must be restored immediately to Emar's account; and (b) where money had been paid by the receivers to any party and had not been refunded by such party, the receivers had to be personally liable. Emar appealed against the judge's orders to the Supreme Court ('the first appeal') and so did Perwira ('the second appeal').

Held, allowing the first appeal in part and allowing the second appeal: (1) upon the facts there was nothing to indicate that the receivers had adopted the second settlement agreement especially so since by the time the receivers were appointed, property in the chattels had passed to Emar; (2) the fact that the consideration stipulated in the second settlement agreement had not been paid did not prevent the passing of ownership in the chattels save and except where recourse is made to the 'reservation of title' clause. There was, however, nothing in the second settlement agreement to indicate that ownership in the chattels would only be transferred to Emar when it had met all its obligations under the second settlement agreement; (3) the order for the transfer of the 20 houses to Aidigi was in substance and effect an order for specific performance. Specific performance, however, will not be ordered against a company in receivership if performance of the contract by the company will involve expenditure for which the receivers may be personally liable. The financial position of Emar was therefore a valid objection to the order for transfer of the 20 houses; (4) in the event the order for the transfer of the 20 houses were to stand, Emar would run the risk of being liable a second time to the purchasers who had entered into sale and purchase agreements pursuant to the second settlement agreement. This was because since the purchasers were not parties to this suit, they would not be bound by the orders made in this case. This constituted an impediment to the making of an order for transfer of the 20 houses; (5) in consequence of setting aside the order for the transfer of the 20 houses, the order for damages for delay in delivery of the houses must also be set aside; (6) each of the three grounds which were relied on by the judge would have rendered the first debenture not void but voidable at the instance of Emar and not Aidigi which was not a party to the first debenture. At no time did Emar ever seek to impugn the first debenture and the stance adopted by Emar assumed that the first debenture was valid; (7) Aidigi had no locus standi to maintain the suit against Perwira and on this ground alone, Aidigi's suit against Perwira ought to have been dismissed; (8) even if Emar had been given a letter of demand stipulating a period for payment of sufficient length and had been promptly served, on the facts in this case, Emar was in no position to have complied with such a letter; (9) Aidigi was an unsecured creditor with no specific right in Emar's property. Accordingly the judge fell into error in ordering Perwira to refund to Emar, all money received by Perwira after the appointment of the receivers. In reality Emar had not suffered any loss by reason of payment received by Perwira after the appointment of the receivers but had in fact benefited thereby; (10) Perwira's right to interest on the redemption sum in respect of the 20 houses was based on a valid charge under the National Land Code 1965 which was executed before the execution of the debentures. The judge had therefore no jurisdiction to rewrite the rights and obligations of the parties to the charge; (11) the order made by the judge against Perwira for the payment of interest to Aidigi was wrong because Perwira was not a party to the settlement agreements. Similarly the order made by the judge against Perwira for the payment of damages for delay in the delivery of the houses was unsustainable because such a claim would only arise if and when an action is brought by the purchasers under the sale and purchase agreements executed pursuant to the settlement agreements; (12) the rules of natural justice demanded that if Aidigi were to be entitled to remedies against the receivers personally, its pleadings had to be properlonally and thereby affording them the opportunity of being heard in their defence. Moreover it was only after the court was functus officio that the judge had decreed by his grounds of judgment, that the receivers were personally liable. Accordingly the orders made against the receivers personally were fundamentally bad and must be set aside.

Emar Sdn Bhd (under receivership) v Aidigi Sdn Bhd and another appeal [1992] 2 MLJ 734 Supreme Court, Malaysia (Harun Hashim, Mohamed Azmi and Edgar Joseph Jr SCJJ).

IPI Sdn Bhd created debenture deeds in A's favour. Pursuant to the debenture deeds, A appointed D as a receiver of IPI Sdn Bhd's properties. D accepted the appointment and forwarded to A a draft letter of indemnity. The draft letter provided for A to undertake separately to pay D remuneration for acting as a receiver, inter alia, in the event of non-recovery from the proceeds of sale. A did not execute the indemnity. Subsequently, A terminated D's appointment after a certain amount of work was carried out by D but before the realization of IPI Sdn Bhd's assets. D claimed for professional fees and disbursement incurred while being a receiver from A. The magistrate court gave judgment in D's favour on the ground that A was liable to pay D's professional fees and disbursement as a receiver. The learned ma-gistrate also held A to be liable because of an implied understanding between the parties since D had done similar receivership jobs for A as instructed by A. A appealed to the High Court.

Held, allowing the appeal: (1) although A in fact appointed D as a receiver, A's power of appointment emanated from IPI Sdn Bhd. All directions and powers conferred upon D as a receiver emanated from IPI Sdn Bhd. D was therefore deemed to be IPI Sdn Bhd's appointment and agent. The debenture deeds provided that the receiver should first pay himself from the proceeds of sale of IPI Sdn Bhd's assets. This means IPI Sdn Bhd would actually be paying the receiver. Moreover the debenture deeds also stated that A shall not be liable to the receiver for his remuneration. D had notice of these provisions in the debenture deeds because copies of the debenture deeds were sent to D together with his letter of appointment. Accordingly A was not liable for D's professional fees and disbursement as a receiver; (2) the law and practice of receivership in United Kingdom has been adopted and followed by the local commercial community. There is no reason that this should be changed. Any party who wish not to be bound by it should contract out of it; (3) there is no evidence of any implied indemnity on A's part to pay D's remuneration as a receiver. The very nature of D forwarding a draft letter of indemnity to A, showed that D was aware that the he was IPI Sdn Bhd's agent and as such it was better for D to obtain from A an indemnity to protect himself.

United Malayan Banking Corp Bhd v Roland Choong Shin Cheong (1991) CSLR XVII[1226] High Court, Johore Bahru (James Foong JC).

Matang Holdings Bhd & Ors v Dato Lee San Choon & Ors [1985] 2 MLJ 406 High Court, Johore Bahru (Yusoff Mohamed J).

The High Court in 1989 appointed receivers and managers for D Sdn Bhd on application by A (the 'first order'). In 1990 D Sdn Bhd was ordered by the High Court to be wound up and a liquidator was appointed. A subsequently applied to the High Court to amend the 'first order' so as to enable the receivers of D Sdn Bhd to complete the housing development project which was initially started by D Sdn Bhd. D Sdn Bhd's liquidator objected to A's application on the ground that the winding-up order would automatically terminate the appointment of D Sdn Bhd's receiver. It was thus argued that D Sdn Bhd's liquidator should instead complete the development project.

Held, allowing A's application: (1) the winding-up order of a company does not automatically terminate an earlier court order appointing the company's receiver; (2) D Sdn Bhd's receivers were not usurping the functions of the liquidator because the receivers' functions would be confined to D Sdn Bhd's assets which were secured in A's favour. Moreover the extent of D Sdn Bhd's liability to secured creditors exceeded the amount of its unsecured liability. In the circumstances of this case, it would be just for D Sdn Bhd's receivers to complete the development project.

Co-operative Central Bank Ltd v Kin Chong Long Perumahan Sdn Bhd Originating Motion No 25-17 of 1990 High Court, Johore Bahru (Abu Mansor J).

[Annotation: The judgment was delivered in Bahasa Malaysia.]

Amanah Merchant Bank Bhd v Sumikin Bussan Kaisha Ltd [1992] 2 MLJ 832 High Court, Kuala Lumpur (VC George J).

In this case, the plaintiffs, on behalf of the shareholders in a private limited liability company, brought an action to restrain the defendants from acting as directors. The plaintiffs charged the defendants 'with thoroughly irresponsible and unsatisfactory mismanagement' causing the company to sustain heavy losses. Among the allegations was an allegation that some of the company's buses had been leased to one of the directors.

Held: in the circumstances where there were serious disputes among the shareholders and as the assets were in jeopardy the court would make an order for the appointment of a receiver and manager. The appointment would be limited until the affairs of the company were sorted out and until the company had a proper board of directors.

Federal Transport Service Co Ltd & Ors v Abdul Malik & Ors [1973] 1 MLJ 216 High Court, Penang (Chang Min Tat J).

Tien Mah Litho Printing Co ('Tien Mah') was incorporated on 26 September 1967 to carry out the business of printers and lithographers. It was originally a family company with majority control in the hands of the Ng family. As Tien Mah's business was doing poorly, the Ng family offered to sell and procure the sale of the majority shares in Tien Mah to Chew and Khoo, who bought 70% of the shares in the name of CC, a Chew family company in which Khoo was a beneficial shareholder. In spite of Chew and Khoo's efforts, Tien Mah's business still did not improve, and by 1983 Khoo wanted to liquidate his investment in Tien Mah as he had been offered a controlling interest in API ('the petitioners'). Tien Mah's business deteriorated further. In late 1985, Tien Mah began looking for new capital. Khoo evinced an interest in investing in Tien Mah again. The parties negotiated, and they orally agreed to merge Tien Mah and API. Subsequently, there were negotiations between Chew, Khoo and a company called Walden Management (S) Pte Ltd to form a new company to take over the business of both API and Tien Mah with a view to obtaining a listing in the Singapore Stock Exchange. The negotiations broke down. Following this, Chew and Khoo then reached an agreement that CC and API sell their shares in Tien Mah to any third party. Again this agreement was aborted. On 21 August 1989, Khoo filed a petition complaining that the respondents had wrongfully caused or enabled the Chews to acquire majority control of Tien Mah. A day after filing the petition, API obtained ex parte an order for interlocutory injunction. The respondents then were awarded an Anton Piller order against API and an order appointing receivers and managers to take control of Tien Mah. After Khoo's death, API withdrew the petition, but challenged the order made in favour of the respondents, contending that the court had exercised its discretion wrongly.

Held, dismissing the application: (1) having regard to the facts, and in particular the deadlock in the management of Tien Mah and the suspicious acts of Khoo's representatives in relation to the accounts of Tien Mah, there was sufficient justification for FA Chua J to appoint the receivers and managers to look after the affairs of Tien Mah. The receivers and managers were not appointed to run down the business of the company but to keep the business running whilst the two contending shareholders sort out their personal and commercial differences; (2) except for the fact of non-disclosure of the debentures, there was no evidence whatever that Chew had deliberately concealed their existence from the court. Whether he knew all the terms of the debentures, including that particular event of default was quite a different thing. There was no intentional non-disclosure of this fact to the court. In any case, the non-disclosure was also not material to the circumstances of this case.

Re Tien Mah Litho Printing Co (Pte) Ltd (1992) CSLR XVII[5] High Court, Singapore (Chan Sek Keong J).

The main question here was whether the appointment of the second defendant as receiver and manager under a debenture dated 2 August 1984 made between the plaintiffs and the first defendant (the debenture holder) was a good and valid appointment. Under cl 9 of the debenture, the person to appoint the receiver is 'a Director, General Manager, Secretary or Manager for the time being of the Debenture Holder'. Under cl 1 of the debenture, the loan was to be repaid by the plaintiffs to the first defendant within nine months of the date of release or the disbursement of the loans, which were made during the second half of August 1984.

Held: (1) the appointment of the receiver was not proper and valid as the proper person to appoint the receiver was a director, general manager, secretary or manager of the debenture holder and not the debenture holder; (2) the loans had not become immediately payable to the debenture holder as they were only payable within nine months after the lending of the moneys.

Pan Asia Shipyard & Engineering Co Pte Ltd v Lim Kuy Bak & Anor 1984 High Court, Singapore (Rajah J).

P had obtained an order for a writ of distress against D for recovery of rent due in respect of the factory situated on the land in question amounting to $720,000 being arrears for the specified period and for the court bailiff to enter the factory to take possession of all the movable goods therein. D through its receiver and manager applied for an order that the goods seized under the writ of distress be released from seizure and that all proceedings be stayed pending the hearing of the application. Counsel for the receiver and manager for D submitted that the main issue was the alleged landlord and tenant relationship between the parties which counsel contended did not exist. P had raised a preliminary objection with regard to the validity of the appointment of the receiver and manager of D. P contended that the receiver and manager had not been properly appointed in the circumstances.

Held, dismissing the application by the receiver and manager of D: (1) taking all relevant factors into consideration, the learned judge came to the conclusion that there was actually no tenancy agreement between the parties and that the distress proceeding by P was an attempt to frustrate the actions of the receiver and manager about one year after his appointment as P had no other remedy in view of the failure in negotiations between the parties; (2) however, in the instant case, the receiver and manager had not been properly appointed in the circumstances. The application by the receiver and manager was, accordingly, dismissed by the learned judge who granted an interim stay pending the appeal by counsel for the receiver and manager of D subject to P applying to set aside the order for the stay.

Marka Industrial Sdn Bhd v Elgi Marka Sdn Bhd (1988) CSLR XVII[4] High Court, Ipoh (Abdul Malek J).

Kam Pau Siong & Anor v Wilayah Fabrication Sd Bhd (Hock Hua Bank (Sabah) Bhd, Garnishee) Civil Suit No K22-40 of 1995—High Court, Kota Kinabalu (Ian Chin J).

Emar Sdn Bhd (under receivership) v Aidigi Sdn Bhd and another appeal [1992] 2 MLJ 734 Supreme Court, Malaysia (Harun Hashim, Mohamed Azmi and Edgar Joseph Jr SCJJ).

The appellants were appointed receivers of the Co-Operative Bank Bhd ('the bank') by an order of court dated 7 March 1989. On 24 April 1989, the respondents obtained an order from the High Court in Originating Summons No S5-31-3640 of 1988, that the bank return certain documents and titles to them. A consequential order that the bank pay the respondents the costs of the application was also made. On 10 December 1990, the respondents took out another action, this time against the appellants, by way of Originating Summons No R8-24-90, seeking an order that the appellants pay the aforesaid costs to the respondents out of the funds of the bank, and that such payment be made forthwith. The summons was heard before a judge-in-chambers who granted the application. The appellants appealed against the order.

Held, allowing the appeal: (1) the appellants were appointed receivers by the court and were therefore first and foremost officers of the court having been appointed under reg 9 of the Essential (Protection of Depositors) Regulations 1986 ('the Regulations'); (2) as the appellants were officers of the court, leave of court should have been obtained to proceed against them in the second originating summons; (3) the costs ordered in Originating Summons No S5-31-3640 of 1988 were costs against the bank and not against the appellants. As such the costs were not costs contemplated by the Regulations and were not incurred by the appellants as receivers; (4) although the courts could use the sanction of an adverse order in costs against receivers, the present case was not one in which the appellants, as receivers, had caused unnecessary proceedings or litigious expenses. In the first originating summons, it was the respondents that had brought the action against the bank. In the second originating summons, it was again the respondents who had taken action against the appellants. Therefore it was not the appellants, as receivers, who had by their misconduct made an unnecessary application to court for the court to exercise its discretion to make an adverse order against them; (5) it could not be disputed, and as conceded by the respondents, that the taxed costs were part of the judgment debt which therefore could only rank pari passu with the other unsecured liabilities.

Zainal Abidin Putih & Anor v Che Wan Development Sdn Bhd [1992] 2 MLJ 233 Supreme Court, Malaysia (Abdul Hamid Omar LP, Gunn Chit Tuan SCJ and Anuar J).

The first intervener, Messrs Saheran & Woon, is the garnishee, holding a sum of RM1,114,482.10 as stakeholders for the receiver in three lower court garnishee proceedings taken out by the second intervener with two others. The second intervener with 16 others are the depositors of Tai Kwong Goldsmith & Jewellers ('the partnership'), which was under receivership. The first intervener obtained an ex parte order dated 30 September 1992 to intervene and an injunction restraining the second intervener and one other from enforcing the garnishee order absolute obtained by the second intervener against the first intervener. The receiver on 22 September 1992 obtained ex parte orders for injunctions to restrain the second interveners and two others with judgment sums from further proceeding to execute the judgment. The receiver obtained a further injunction against the other interveners who had not obtained judgments yet. The receiver then filed this application for directions with regard to the question of the priority of payments between the second intervener and 16 others as the depositors of moneys with the partners and the former employees of the dissolved partnership or alternatively whether the distribution should be on a pari passu basis.

Held, making the necessary directions: (1) it is a euphemism to say that the 'receivers as officers of the court are untouchables' and no action can be instituted against them without leave of the court. It is only the assets held or vested in the receivers which are 'untouchables' where statute or any other law or regulation provides for how the receivables vested with the receivers should be distributed. The order appointing the receiver may provide or reserve priority ranking of payment out of distribution of the assets or receivables debt by the receivers. It is only where the conduct or misconduct of the receiver is being put into question in any court of law by a claimant against the receiver personally or in the manner of his conduct in discharging his duties that leave of the court must be obtained. Leave of the original court appointing the receiver is required because it is only proper that as the court originally appointing the said receiver, it should be the proper forum to give direction, supervise or discipline if necessary and decide on any issue pertaining to the conduct of its own officers. It is a wrong presumption of law to say that before any proceeding is taken out against court-appointed receivers, leave of the original court appointing him must first be obtained. Whether leave is or is not required will depend on the merits of each case; (2) in the present case, s 46(b)(i) of the Partnership Act 1961 specifically gives first priority of the application of partnership assets to pay for the firm's debts and liabilities to non-partner creditors. The duty of the receiver under s 46(b)(i) is therefore to apply the partnership assets to first pay the firm's debts and liabilities to the firm's creditors in priority over other claims; (3) if leave of the court is required in all garnishee proceedings taken out against the receiver, the rules of procedure would have provided for it. Order 46 r 2(1) of the Rules of the High Court 1980 provides that a writ of execution to enforce a judgment or order may not issue without the leave of the court in the cases listed under the rule. However, the rule conspicuously and specifically omitted to include garnishee proceedings. In the event, the rule with regard to leave to enforce any judgment or order will not apply to garnishee proceedings; (4) the partners' interests appear to be of paramount consideration. To issue the injunctions at the instance of the receivers in the present case against the judgment creditors of the firm and direct them to levy execution against the partners individually, would not be in the partners' interest. Section 41 of the Partnership Act 1961 applies. There is therefore no legal impediment to the second intervener to proceed with the garnishee proceedings; (5) the word 'rateably' ought not to be read into s 46(b)(i) of the Partnership Act 1961. If Parliament had intended the section to mean pari passu distribution of the partnership debts, it would have expressly stated so. The conclusion is that the omission is deliberate and that Parliament never intended to import the word 'rateably' into s 46; (6) in a situation where a partnership is dissolved, equity will apply in favour of the partners to protect the partner's interest. While there are still funds in the partnership property they should first be applied to pay off pressing debts in lieu of asking such creditors to go against the partners in bankruptcy or in execution. Creditors of the partnership shall, in regard to the partnership assets have priority over the creditors of an individual partner. Section 43 of the Bankruptcy Act 1967 cannot be applied for a pari passu distribution in a situation such as this, where there is no evidence that all partners are bankrupt and neither is the firm a bankrupt. In any event, a firm which has been dissolved cannot be said to be a bankrupt; (7) it is in the interest of the partners and for their protection that such debts be paid notwithstanding the appointment of a receiver. The debts owing to the second intervener must be considered as pressing and payment out would avoid the execution of the debts against the individual partners.

Lee Choo Yam Holdings Sdn Bhd & Ors v Khoo Yoke Wah & Ors (Tai Kwong Goldsmith & Jewellers (under receivership); Saheran & Woon & Ors, Interveners) [1993] 3 MLJ 615 High Court, Kuala Lumpur (Anuar J).

[Annotation: Reversed on appeal. See [1995] 1 MLJ 1.]

By an order of the High Court made pursuant to the Essential (Protection of Depositors) Regulations 1986 ('the Regulations'), Messrs Hanafiah Razlan Mohamed & Co Insolvency Services were appointed receivers and managers ('the receivers') of the Co-Operative Central Bank Ltd ('CCB'). Bank Negara ('the applicant') sought an order, inter alia, that the receivers be discharged as the receivers and managers of CCB, on the ground that there would be considerable savings in the management costs of CCB if the services of the receivers were discharged. The receivers sought a suitable provision in the order that they be indemnified against all liabilities that may be incurred by them in the discharge of their duties as receivers and managers. The issues before the court were: (i) had the receivers the locus standi to appear at the hearing of the application for their discharge; and (ii) could and should the court grant the receivers an indemnity against all liabilities, present and future, found to be properly incurred, in the order for their discharge.

Held, allowing the applicant's application for discharge of the receivers and granting an indemnity to the receivers: (1) the receivers had locus standi to appear in the application for their discharge as they had been made parties to the proceedings and served with the application; (2) as there would be a considerable savings in the cost of management of CCB if the receivers were discharged, the court would exercise its discretion to have the receivers discharged; (3) it was only right that the receivers be placed in the proper position where they stood in the discharge of their duties at the relevant time, as their course of action was correct and clearly for the benefit of CCB. The applicant could not be allowed to have the benefit of the receivers' duties without having the burden, and the applicant, or its appointee under reg 9(1)(b) of the Regulations, should be made to shoulder the obligations. In this case, the appointees of the applicant should be substituted for any liabilities, present and future, found to be properly incurred by the receivers; (4) the court acknowledged that indemnity was to be given to the receivers, and that such indemnity was to be from the assets of CCB; (5) the costs of the proceedings were to be borne by the applicant as it was necessary for the receivers and managers and others to be heard.

Bank Negara Malaysia v Co-Operative Central Bank Ltd [1993] 3 MLJ 460 High Court, Kuala Lumpur (Abu Mansor J).

D appointed R as receivers of P under a power conferred by a debenture. When the receivership was discharged, P asked that R deliver up all documents relating to the receivership. R declined to deliver up some documents, which they claimed were created for the purpose of advising D as debenture holder. P applied to court for an order that R deliver up the documents. The judge declined to make the order. P appealed.

Held, dismissing P's appeal: (1) the basis of P's claim to ownership was that R were agents of the company during the period of the receivership. Although as a general rule all documents concerning the principal's affairs prepared or received by an agent belong to the principal and have to be delivered up on the termination of the agency, this principle cannot be mechanically applied to a receivership. The agency of a receiver is not an ordinary agency, but primarily a device to protect the debenture holder; (2) the relationship set up by the debenture is tripartite and involves the mortgagor, the receiver and the debenture holder. The receiver is appointed by the debenture holder and becomes the mortgagor's agent irrespective of the mortgagor's consent. The mortgagor, although it pays the receiver, does not control the conduct of the receivership. The receiver owes a fiduciary duty to the debenture holder, who has a right to be put in possession of all the information concerning the receivership available to the receiver. The result is that the receiver, in the course of the receivership, performs duties on behalf of the debenture holder as well as the mortgagor; (3) documents created or received in pursuance of the duty to manage the affairs of the company belong to the company. On the other hand, documents created for the purpose of informing the debenture holder of the conduct of the receivership do not belong to the company. Thirdly, documents prepared by the receivers not in pursuance of any duty to prepare them but simply to enable the receivers to do their duty belong to the receivers; (4) the documents in question in this case were not documents to which the company was entitled.

Gomba Holdings UK Ltd & Ors v Minores Finance Ltd & Ors [1989] 1 All ER 261 Court of Appeal, England (Fox, Stockner and Butler-Sloss LJJ).

Zeno Ltd v Prefabricated Construction Co (Malaya) Ltd & Anor [1967] 2 MLJ 104 High Court, Kuala Lumpur (Raja Azlan Shah J).

A first debenture was issued on 11 August 1975 by Glen Eden Motors Ltd ('GEM') and a second debenture was issued on 18 September 1986 in favour of the first respondent. Each debenture created a fixed charge over certain assets of the company and a floating charge over the remainder. The debentures also contained a power for the debenture holder to appoint a receiver and manager, who was to be deemed to be the agent of the company and was authorized to perform any acts which the company could perform. The first debenture was assigned to the appellant company and the second appellant appointed a receiver and manager under that debenture. Prior to this the first respondent had appointed a receiver and manager under the second debenture. The second appellant without considering the interests under the second debenture, continued to trade under GEM. The respondents sued for damages which was granted at first instance. On appeal, the Court of Appeal reversed in part the decision. The appellants appealed to the Privy Council and the respondents cross-appealed for the reinstatement of the trial judge's decision.

Held, dismissing the appeal and allowing the cross-appeal: (1) a mortgage, whether legal or equitable, is security for repayment of a debt. The security may be constituted by a conveyance, assignment or demise or by a charge on any interest in real or personal property. An equitable mortgage is a contract which creates a charge on property but does not pass a legal estate to the creditor. Its operation is that of an executory assurance, which, as between the parties, and so far as equitable rights and remedies are concerned, is equivalent to an actual assurance, and is enforceable under the equitable jurisdiction of the court; (2) the security for a debt incurred by a company may take the form of a floating charge which becomes a fixed charge on the assets comprised in the security when the debt becomes due and payable. A security issued by a company is called a debenture but for present purposes there is no material difference between a mortgage, a charge and a debenture. Each creates a security for the repayment of a debt; (3) the owner of property entering into a mortgage does not by entering into that mortgage cease to be the owner of that property any further than is necessary to give effect to the security he has created. The mortgagor can mortgage the property again and again. A second or subsequent mortgage is a complete security on the mortgagor's interest subject only to the rights of prior incumbrancers; (4) he is not merely selling or dealing with the interests of the mortgagor. He is exercising the power of selling and dealing with the mortgaged property for the purpose of obtaining repayment of the debt owing to his mortgagee. The receiver and manager owes these duties to the mortgagor and to all subsequent incumbrancers in whose favour the mortgaged property has been charged; (5) two rules applicable to mortgagees, namely, that powers conferred on a mortgagee must be exercised in good faith for the purpose of obtaining repayment and that these powers may be exercised although the consequences may be disadvantageous to the borrower, are also applicable to a receiver and manager appointed by the mortgagee; (6) in the absence of any legislation, the only limitations on the exercise of power by a receiver and manager are the requirements to act in good faith for the purpose of preserving and realizing the assets for the benefit of the debenture holder; (7) like the mortgagee, when a receiver and manager exercises the powers of sale and management conferred on him by the mortgage, he is dealing with the security;if the defined equitable duties attaching to mortgagees and to receivers and managers appointed by debenture holders are replaced or supplemented by a liability in negligence, the result will be confusion and injustice.

Downsview Nominees Ltd & Anor v First City Corp Ltd & Anor Privy Council Appeal and Cross-appeal No 13 of 1991 Privy Council on appeal from New Zealand (Lord Templeman, Lord Lane, Lord Goff of Chieveley, Lord Mustill and Lord Slynn of Hadley).

Re SAMA Corp Sdn Bhd, CI Holdings Bhd v Jabatan Pemegang Harta [1992] 2 MLJ 251 High Court, Kuala Lumpur (Zakaria Yatim J).

Amanah Merchant Bank Bhd v Sumikin Bussan Kaisha Ltd [1992] 2 MLJ 832 High Court, Kuala Lumpur (VC George J).

Amanah Merchant Bank Bhd v Sumikin Bussan Kaisha Ltd [1992] 2 MLJ 832 High Court, Kuala Lumpur (VC George J).

The first and second defendants decided on a joint venture to develop the first defendant's land into a shopping complex. The plaintiffs were a consortium of financiers who lent the required money for the joint venture on the security, inter alia, of a debenture on the land and the shopping complex. The third, fourth, fifth and sixth defendants were guarantors for the loan. The project came to a standstill due to a lack of money. The debenture was crystallized and receivers and managers ('the receivers') were appointed. The receivers sold the partially completed shopping complex to the second defendant for a purchase price which resulted in a substantial shortfall in respect of the amount owing to the consortium. The plaintiffs took out and succeeded in an O 14 application against the joint venture partners and the guarantors. The guarantors appealed against the decision contending that the sale by the receivers was done in bad faith.

Held, dismissing the appeal: (1) once the borrower company is wound up, the receivers cease to be its agent. In the absence of any evidence of instructions or directions from the debenture holder, the court will be reluctant to find that the receivers had become its agents. Gosling v Gaskell [1897] AC 575 and Thomas v Todd [1926] 2 KB 511 followed; (2) in this case, the defendants failed to provide even a semblance of a basis for the contention that there was any interference, instructions or directions. It followed that the contention that receivers were or had become the agents of the consortium of any of its members is also without any basis; (3) even if the receivers had been negligent in the discharge of their duties or in any event had obtained a lesser amount than they could have obtained for the sale of the project, such negligence or omission did not provide a triable issue in the action by the consortium against the defendants; (4) the contention that the sale was completed negligently or, in any event, at an undervalue was without merit and does not provide a bona fide triable issue.

MBf Finance Bhd & Ors v Natcom Development Sdn Bhd & Ors (1994) CSLR XVII[328] High Court, Kuala Lumpur (VC George J).

The plaintiff, the official receiver ('OR'), was by court order, appointed liquidator of Allied Chocolate Pte Ltd ('ACO'). The first three defendants ('the receivers') were the receivers and managers of ACO appointed by Bank of America ('BOA'), the secured creditors of ACO. The fourth defendants, De Zaan Far East Pte Ltd ('De Zaan'), were the purchasers of the property and assets of ACO under a sale and purchase agreement with the receivers dated 14 May 1984 ('the said agreement'). The assets comprised a factory on land leased from the Jurong Town Corporation ('JTC') and machinery and equipment affixed on the premises. Under cl 26(d) of the said agreement, the receivers warranted that ACO had good, indefeasible and marketable title to the assets which were sold free from incumbrances. Under cl 29, the receivers provided an indemnity to De Zaan for a maximum aggregate amount of $18.78m for any damage, liability, loss, cost or deficiency arising out of any breach of the said agreement provided that the receivers were notified of the claim not later than 27 June 1985. On 26 June 1985, De Zaan sent to the receivers two letters of awareness giving notice of claims made by five companies to the ownership of certain machinery, and also regarding JTC's refusal to include language in the lease acknowledging De Zaan's ownership of the machinery and equipment affixed to the premises. De Zaan maintained that JTC's refusal to so acknowledge De Zaan's ownership was adverse to De Zaan's claim to the assets and consequently claimed for an indemnity under cl 29 of the said agreement. By March 1988, BOA had received full payment of their debts and there were surplus assets in the hands of the receivers, but they retained these surplus assets as an indemnity fund in apprehension of De Zaan's claim. Despite reminders from the OR, the receivers failed to resolve the dispute regarding De Zaan's right to claim the indemnity. Hence, on 25 January 1990, the OR commenced the originating summons herein to obtain a declaration as to whether De Zaan had a valid claim against the receivers and an order that the receivers pay over the surplus funds to the OR. The OR argued further that even if De Zaan had a valid claim, the receivers should not have given the warranty and indemnity, and were not justified in retaining the surplus assets as they did. Furthermore, the OR accused the receivers of being dilatory in bringing an action to resolve the dispute with De Zaan.

Held, allowing only the application against De Zaan: (1) at common law, a tenant has the right to remove tenant's fixtures so long as he is in possession as a tenant. The trade fixtures in the nature of those in the current dispute could be unhinged and removed by De Zaan as tenants in possession. In the circumstances, De Zaan's belief that the machinery which they had purchased under the sale agreement, and which were affixed to the land, could not be removed at all was a misconception not supported by existing learning; (2) the term 'incumbrance' in cl 26 of the agreement has no strict legal meaning. It is defined in Wharton's Law Lexicon as 'a claim, lien or liability attached to property'. In ordinary parlance, it denotes something burdensome; (3) the word 'claim' connotes a demand or an assertion of right emanating from a claimant. It must be palpable, manifest and something real. A claim could not be left to conjecture or be equated to an uncertain event which was yet to materialize, such as a 'possible adverse claim in 2014'. JTC's refusal to include the desired amendments to the lease was more an act of non-accomodation on the part of JTC rather than an 'inferential claim'. As such, De Zaan's averment that JTC had inferentially laid a claim to the machinery was without substance; (4) the duties of receivers in exercising the powers of sale conferred on them was the same as those of mortgagees exercising their powers of sale. So long as the receivers exercised their powers of sale bona fide without corruption or collusion with the purchaser, the court would not interfere even though the sale be very disadvantageous, unless the price was so low as in itself to be evidence of fraud. In this case, what was done by the receivers was bona fide: the warranty was demanded and, being in accord with norm al business practice in such transactions, was given by the receivers; (5) the receivers here were faced with an actual and real claim from De Zaan. Although the receivers had received advice that DeZaan's claim was without merit, there was apprehension concerning De Zaan's claim, which was not a remote contingency. As such, the receivers were rightly entitled to be indemnified and the holding of the surplus funds was not in bad faith or unreasonable; (6) the OR could equally have brought the action to determine the dispute instead of waiting for the receivers. In any case, as all the claims were resolved only in 1992, it would have been premature to make an application regarding the claim earlier. There was, therefore, no unreasonable delay.

Official Receiver (as liquidator of Allied Cocoa Industries Pte Ltd (in liquidation)) v Chi Man Kwong & Ors [1994] 1 SLR 809; CSLR XVII[329] High Court, Singapore (Rubin JC).

The plaintiff had been engaged by Taman Eden Sdn Bhd ('TESB') in May 1987 to manage a durian orchard on their land. The land was charged by TESB to the first defendant. On 10 May 1988, the first defendant appointed the second defendant as the receiver and manager of TESB. The plaintiff alleged that subsequently the second defendant's agent had requested him to continue managing the orchard until the durians were harvested. The plaintiff also alleged that the agent had promised to pay for various expenses incurred by the plaintiff in connection with the orchard. The plaintiff obtained an injunction restraining the defendants from managing, dealing with, interfering or entering the land pending the disposal of the suit. The defendants applied for an order that the injunction be dissolved.

Held, dismissing the defendants' application: (1) the plaintiff was employed by TESB; (2) the appointment of a receiver and manager as agent of the company does not itself automatically terminate contracts of employment previously made and subsisting between the company and all its employees; (3) and (c) where the continuation of the employment of a particular employee is inconsistent with the role and function of a receiver and manager; (4) in three exceptional circumstances, however, such appointment will result in termination of employment contracts, viz: (a) where the appointment of a receiver is accompanied by a sale of the business of the company; (b) where the receiver enters into a new agreement with a particular employee that may be inconsistent with the old contract;in the instant case, since the contract had not been terminated by the second defendant on their appointment as receiver and manager and that none of the three exceptions stated applied, upon a balance of convenience, it was better for the status quo to be maintained as at 15 June 1988 when the injunction was granted.

Yeoh Lam Beng v United Asian Bank Bhd & Anor [1988] 3 MLJ 489 High Court, Ipoh (Abdul Malek J).

This was an appeal by the judgment creditor against the decision of a registrar refusing to order that the receiver and manager of the judgment debtor (defendant) be examined as to the ability of the judgment debtor to satisfy a judgment obtained by the judgment creditor. According to O 48 r 1 of the Rules of the High Court 1990, the court may 'order the judgment debtor, or if the judgment debtor is a body corporate an officer thereof, to attend before the Registrar' for an oral examination to ascertain what debts are owing by the debtor and whether the debtor has any other property or means of satisfying the judgment. The question to be decided was whether or not a receiver/manager of a company could be said to be an officer of that company.

Held, dismissing the appeal: (1) there is no definition of 'officer of the company', either in the Rules of the High Court or in the Companies Act. The ordinary meaning of the term 'officer of the company' is that the person should be employed by the company, though not necessarily full time or that he be a senior employee or a director. A receiver/manager is not an employee of the company. even if, for certain purposes, he is entitled to act as agent for the company. He is appointed not by the company, but by a group of its creditors; (2) the receiver/manager of the judgment debtor was thus correct in refusing to attend as an officer of the company. A summons to attend should thus be issued to the managing director of the judgment debtor, or to another officer of it. If the managing director or other officer of the judgment debtor were not able to give much information because the receiver/manager was in possession of all relevant documents and books of account, it would then be for the registrar, it he thought fit, to issue an order to the receiver/manager to produce any books which might assist the registrar in deciding whether the judgment debtor could pay the debt.

Yong Piling Contractor v Pyramid Construction Civil Suit No 90 of 1990 High Court, Brunei (Roberts CJ).

P and D were partners of a firm. Throughout the years, there had been several changes to the firm particularly in the constitution of the partners. D had subsequently assumed management of the partnership which had brought about a split in the partnership with two groups of partners opposed to each other. P feared that the firm's assets would be put in jeopardy by D and accordingly an application was made by P for the appointment of an interim receiver. D objected to the application.

Held, allowing the application: (1) in the instant case, P had shown special grounds for the application to appoint an interim receiver, namely, that it was necessary for the protection of the firm's assets; (2) as a matter of principle, a person appointed a receiver must be an independent person who has no interest whatsoever in any matter between any of the disputing parties. For the above reason, the learned judge appointed P's nominee as interim receiver as he had no dealings whatsoever with the firm.

Lee Choo Yam Holdings Sdn Bhd & Ors v Khoo Yoke Wah & Ors Originating Summons No D2-31-198-1988 High Court, Kuala Lumpur (Siti Norma Yaakob J).

Zainal Abidin Putih & Anor v Che Wan Development Sdn Bhd [1992] 2 MLJ 233 Supreme Court, Malaysia (Abdul Hamid Omar LP, Gunn Chit Tuan SCJ and Anuar J).

Co-operative Central Bank Ltd (in receivership) & Ors v Industrial Court of Malaysia & Ors [1994] 2 MLJ 285; CSLR XVII[580] High Court, Kuala Lumpur (Abu Mansor J).

The appellants were two of the four shareholders of Lemo Sdn Bhd ('Lemo'). Lemo had obtained a loan from Bank Pertanian Malaysia ('the bank') to develop an oil palm plantation on the 2,000 acres of land ('the land') that had been alienated to it by the State Authority of Terengganu. Subsequently, the appellants entered into a sale and purchase agreement for the sale of all of their shares in Lemo to one Nestra Plantations Sdn Bhd ('Nestra'). Nestra failed to settle the purchase price of the shares in full and the appellants brought a suit against Nestra in the High Court at Seremban. This suit is still pending. Lemo then fell into indebtedness, and upon the application of the appellants, the High Court at Seremban ordered that the Official Receiver be appointed as the receiver and manager of the assets and undertakings of Lemo. Nestra and Lemo were also ordered to deliver all the stock-in-trade, business effects, deeds and documents of Lemo to the Official Receiver. On appeal by Nestra and Lemo, the Supreme Court by consent vacated the aforesaid orders made by the High Court at Seremban, and instead, issued an interim injunction ('the injunction') restraining Nestra and Lemo from dealing with the land in any manner whatsoever without the leave of the court until the disposal of the appellants' suit by the High Court at Seremban. The receivers and managers of Lemo who were subsequently appointed by the bank then applied to the High Court at Kuala Lumpur for, and was granted, leave to lease, grant licence or sell the land. The appellants appealed to the Supreme Court against the aforesaid order made by the High Court at Kuala Lumpur.

Held, allowing the appeal and setting aside the order made by the High Court at Kuala Lumpur: (1) the finding of the High Court at Kuala Lumpur that the appellants had no locus standi to object to the application made by the receivers and managers of Lemo on the ground that the appellants had ceased to be shareholders of Lemo was a premature finding; (2) this suit had yet to be heard; (3) this was because the appellants had brought a suit against Nestra in the High Court at Seremban in which they are seeking a declaration that the sale and purchase agreement between Nestra and themselves was null and void, repudiated and terminated, and, for the return of the share certificates and the instrument of transfer to themselves;the primary purpose of the injunction that was issued by the Supreme Court was to preserve the status quo until the final disposal of the appellants' suit by the High Court at Seremban. In the instant case, there were no special circumstances that could have justified the granting of leave to the receivers and managers of Lemo to deal with the land. The granting of such leave would have the effect of dissolving the injunction. On this ground alone, the appellants' appeal was allowed.

Leong Wan Ying & Anor v Abdul Jabbar bin Abdul Majid & Anor [1994] 2 MLJ 399; CSLR XVII[705] Supreme Court, Malaysia (Harun Hashim, Peh Swee Chin and Wan Yahya SCJJ).

X Sdn Bhd executed a debenture in favour of Bank Y in consideration of the latter granting credit facilities to the former. X Sdn Bhd also registered a charge over its land in Bank Y's favour under the National Land Code 1965. Bank Y subsequently transferred the debenture and the charge to Bank Z. X Sdn Bhd was ordered by the court to be wound up. Bank Z pursuant to the debenture appointed S as X Sdn Bhd's receiver and manager. S applied to the High Court for leave to sell X Sdn Bhd's land. S exhibited a few valuation reports in his application. One of the valuation reports was prepared by B which stated the fair market value of X Sdn Bhd's land to be M$1.875m. S obtained the court order granting him leave to sell X Sdn Bhd's land (the 'order'). There were five applications to the High Court to set aside the 'order'. All the applications, except the second application, were made by X Sdn Bhd's creditors. The second application was filed by L who was X Sdn Bhd's former director. L firstly argued that S had no capacity or power under the debenture to sell X Sdn Bhd's land because the debenture merely provided for a floating charge. L contended that there was already a separate charge over the land under the 1965 Code which was immediately fixed to the land the moment it was charged. L further alleged that B's valuation report was defective because although B purported to have adopted the comparison method of valuation, B's report however did not show any evidence of the values of comparative properties. L also argued that there were two other valuation reports which were not brought to the court's attention when S made his application.

Held, allowing the five applications to set aside the 'order': (1) the debenture merely provided for a floating charge in respect of X Sdn Bhd's land. S thus had no capacity or power to invoke the debenture; (2) since X Sdn Bhd's land was held under 'Land Office title', the only remedy open to Bank Z as chargee was under the 1965 Code. In view of ss 260 and 261(1) of the 1965 Code, the court had no jurisdiction to order the sale of X Sdn Bhd's land; (3) a receiver and manager has the duty to take reasonable care to obtain the true market value of the property at the time of the sale although he was not obliged to sell the property at the highest price; (4) B's valuation report was defective because it did not disclose the comparable basis for the valuation. S had thus failed to obtain the true market value of X Sdn Bhd's land when he applied for 'the order'. There was therefore no evidence to show that M$1.875m was the true market value of the land.

Re SAMA Corp Sdn Bhd; CI Holdings Bhd v Jabatan Pemegang Harta [1992] 2 MLJ 251 High Court, Kuala Lumpur (Zakaria Yatim J).

Malayan Prestressed Concrete Strand Manufacturing Sdn Bhd & Anor v Malaysian Ropes Sdn Bhd [1991] 3 MLJ 482 High Court, Ipoh (Abdul Malek J).

Kimlin Housing Development Sdn Bhd ('the company') created two National Land Code charges over lands in favour of the first plaintiff to secure certain banking facilities. Subsequently, a deed of debenture was also created in favour of the first plaintiff. The said debenture provided, inter alia, that the first plaintiff could appoint receivers and managers over the properties charged, with powers to sell them. Pursuant to the said provisions, the second, third and fourth plaintiffs were appointed as receivers and managers. They applied to the court to obtain leave to sell the properties which were charged under the National Land Code 1965. The company had since gone into liquidation and the liquidator opposed the application. Counsel agreed that the only issue was whether the receivers and managers have the right and power to sell the property without resorting to the procedures for sale of lands charged as prescribed by the National Land Code 1965.

Held: (1) where the debenture gives clear powers of sale, there is no need for a further power of attorney giving the same power. The receivers and managers were entitled to do any and all things and matters that the debenture entitled them to do; (2) the secured creditor could dispose of the securities in spite of the liquidation.

Bank Bumiputra Malaysia Bhd & Ors v Kimlin Housing Development Sdn Bhd (Receivers and Managers Appointed) [1993] 2 MLJ 126 High Court, Kuala Lumpur (VC George J).

The Co-operative Central Bank Ltd ('CCB') was placed under receivership under the Essential (Protection of Depositors) Regulations 1986 as a result of its financial collapse. Both A1 and A2, the employees of CCB, were retrenched by D, the receivers. On the application of D for directions as to priority of payments, the High Court ruled that immediately after the receivers' liabilities, the CCB deposit liabilities should take priority for payments over employees' liabilities and all other liabilities. Both A1 and A2, being dissatisfied with the decision of the High Court, appealed to the Supreme Court. The contention of A was to the effect that their claims for wages should take priority over the claim of the depositors who were mere customers of CCB.

Held, , allowing the appeals: (1) in the instant case, the court is only concerned with the question of priority of payments under the Essential (Protection of Depositors) Regulations 1986 in circumstances where the assets of the CCB are insufficient to satisfy all its liabilities. As far as priority of payments is concerned, reg 13 provides for only one priority, namely, the costs, expenses, remuneration of the receivers and persons appointed under the 1986 Regulations; (2) it is a well established principle that the purposive approach to the interpretation of legislation only applies where any doubt arises from the terms or words employed by the legislature. Where the words used are precise and unambiguous as is the case with reg 13, then the literal and strict construction rule should apply. In the instant case, in the absence of uncertainty in the terms employed in reg 13, the learned judge erred in law in giving priority of payments to the depositors in preference to the claims of A; (3) under reg 13, apart from the specified liabilities, all other liabilities have no priority and therefore must rank equally. It makes no difference whether A's claims are based on statutory awards or merely under contracts of employment made before or after the appointment of D as receivers. For the above reasons, CCB's assets must accordingly be applied pari passu in satisfaction of the depositors' and employees' liabilities subject only to the priority provided by reg 13.

Wong Pot Heng v Hj Zainal Abidin Putih & Anor; Hj Rosli bin Hj Kamaruddin v Hj Zainal Abidin Putih & Anor (1990) CSLR XVII[1029] Supreme Court, Malaysia (Mohamed Azmi, Ajaib Singh and Gunn Chit Tuan SCJJ).

Emar Sdn Bhd (under receivership) v Aidigi Sdn Bhd and another appeal [1992] 2 MLJ 734 Supreme Court, Malaysia (Harun Hashim, Mohamed Azmi and Edgar Joseph Jr SCJJ).

The plaintiffs are the receivers and managers of Global Pacific Textiles Industries Sdn Bhd (in receivership) ('GPTI'). They were appointed on 16 March 1992 by the debenture holders of the company. As at 31 July 1992, amounts claimed by the defendant to be owing by GPTI included customs duties and sales tax claimed by the Director General of Customs and Excise and Employees Provident Fund ('EPF') contributions claimed by the Employees Provident Fund Board. The first defendant alleged that because of the failure of GPTI to pay the sales tax, the first defendant invoked his power under s 30(1) of the Sales Tax Act 1972 and seized the goods belonging to GPTI on 6, 8 and 10 March 1992, before the appointment of the receivers and managers on 16 March 1992. The first defendant contends that the goods seized by the first defendant no longer formed part of the assets of GPTI. At the time the floating charges were crystallized, the goods were already outside the possession and right of GPTI. The plaintiffs therefore could not claim a right over the said goods as forming part of the items in receivership. In this application, the plaintiffs sought declarations and orders relating to the priority of claims of each party vis-a-vis the other parties in the matter.

Held: (1) in the present case, where the goods were seized while GPTI was still carrying on business as the floating charges had not yet crystallized, the seizures were binding on the plaintiffs as receivers and managers; (2) as the goods seized by the first defen-dant pursuant to s 30(1) of the Sales Tax Act 1972 were not subject to the floating charges, the section is not applicable to the said goods. But the section is applicable to all other goods of GPTI which are not seized by the first defendant ('the other goods'); (3) by reason of the provisions of s 10 of the Government Proceedings Act 1956, the customs duties and sales tax leviable against GPTI have priority over the claims by the debenture holders and the receivers and managers for their costs and expenses; (4) the claim for EPF contributions also has priority over claims of the debenture holders and the receivers and managers; (5) in respect of the other goods, the claim for EPF contributions take priority over claims for customs duties and sales tax; (6) with regard to the goods seized under s 30 of the Sales Tax Act 1972, the first defendant is entitled to proceed with the sale in accordance with the provisions of the section. However, as s 66 of the Employees Provident Fund Act 1991 applies, from the sales proceeds payment must be made for the amount due in respect of EPF contributions payable by GPTI for 12 months if still outstanding after the EPF has been paid from the proceeds of sale of the other goods.

Global Pacific Textile Industries Sdn Bhd (in receivership) v Ketua Pengarah Jabatan Kastam dan Eksais & Ors [1994] 3 MLJ 175; CSLR XVII[1038] High Court, Kuala Lumpur (Wan Adnan J).

The plaintiffs are the receivers appointed by a financial institution under a debenture issued by a company known as Setama Sdn Bhd ('Setama'). The debenture created a first fixed charge over certain assets of Setama. Upon their appointments they gave notice to the Director General of Customs and Excise of Malaysia as required under the Sales Tax Act 1972 and took possession of the fixed assets and sold them for M$1.2m. The proceeds of sale were insufficient to repay in full the total amount outstanding under the loan. The defendants wrote to the plaintiffs stating that there is an outstanding sum of M$55,226.52 due from the company under the Sales Tax Act 1972 and that the plaintiffs should pay the sum over to the defendants. The plaintiffs then applied to court seeking a declaration that they are not liable to pay the sum due as sales tax to the defendants in priority to the fixed charge created under the debenture.

Held, dismissing the plaintiffs' application: (1) the issue is whether the sales tax ranks as a priority payment over the fixed charge of a debenture holder in the event when receivers are appointed. This would depend on the interpretation of s 70 of the Sales Tax Act 1972. Sections 191 and 292 of the Companies Act 1965 concern a floating charge and winding-up proceedings respectively and are not applicable; (2) s 70 of the Sales Tax Act 1972, standing on its own, does not provide a priority payment for sales tax so incurred. It merely sets out the duties of the receiver. Section 23 of the Sales Tax Act 1972 provides that sales tax should be recovered by way of a civil debt. In such a case s 10 of the Government Proceedings Act 1956 applies and it gives the debt a preferential treatment over all debts or claims of every kind which shall, subsequent to such date, have been contracted or incurred by or become due from such person to any other person whomsoever except any right vested in any person by virtue of a mortgage or charge of immovable property duly registered in the manner provided by law for the registration of such mortgage or charge; (3) from the evidence the sales tax in this case was incurred before the appointment of the receivers. As the receivers must have been appointed due to a default, the debt due to the debenture holders can be taken as at the date of the appointment of the receivers. As such the debt was due after the sales tax was incurred; (4) in any event the fixed charge in this case is not related to immovable property and therefore does not qualify under the exception found in s 10 of the Government Proceedings Act 1956.

Anuarul Aini & Anor v Ketua Pengarah Kastam Dan Eksais Diraja Malaysia, Johore Bahru [1991] 1 MLJ 360 High Court, Johore Bahru (James Foong JC).

In this case the Pan-Malaysia Industries Ltd had failed to pay contributions to the Central Provident Fund in respect of certain of its employees. The company was charged for failure to do so and was convicted and fined. In addition, the company was ordered to pay arrears of contributions amounting to $48,493.30. The company paid $10,483.25 leaving a balance of $38,010.05 due and owing to the Central Provident Fund Board. Subsequently the plaintiffs were appointed receivers and managers of the company at the instance of the Chase Manhattan Bank pursuant to the provisions of three debentures created by the company in favour of the bank. The assets of the company were insufficient to meet the claim of the debenture holders in full so that if the claim of the Central Provident Fund Board were postponed to the claim of the debenture holders, the board would not be able to get anything. It was contended by the plaintiffs that having regard to the provisions of ss 191 and 292 of the Companies Act (Cap 185, 1970 Ed), only a sum of $13,276.16 (being contributions payable during the 12 months previous to the appointment of the receivers) would be payable by way of preferential payment before the claim of the debenture holders were met. The defendants contended that the whole of the sum of $38,010.15 was payable to them in preference to any claim of the debenture holders.

Held: in the circumstances of the case, the board was entitled to rank as preferential creditor for the sum of $13,276.16. As regards the balance of $24,733.89 due to the board, payment of this sum had to be postponed until after the debenture holders had been paid.

Re Pan-Malaysia Industries Ltd; Tay Ah Kee & Anor v Central Provident Fund Board 1978 High Court, Singapore (Choor Singh J).

The 31 plaintiffs were former employees of the first defendants which under a deed of debenture charged their assets to the second defendants by way of a floating charge. The plaintiffs claimed against the first defendants the total sum of $74,759.19 being salaries payable to them in lieu of notices of termination of their respective contracts of employment with the first defendants. As against the second defendants, the plaintiffs claimed a declaration that the said sum be paid out of the assets of the first defendants in priority to the claims of the second defendants. On 5 September 1985, the second defendants appointed three persons to be the receivers and managers of the assets of the first defendants under the debenture and on the following day the receivers and managers terminated the services of all 31 plaintiffs without any notice of termination or any payment of salary in lieu of notice. The question for determination was whether the plaintiffs' claim ranked in priority over the second defendants' floating charge. Under s 328(1) (b) of the Companies Act (Cap 50, 1985 Ed), a claim for 'salary' of an employee becomes a preferential debt when two conditions are met: (a) the amount claimed does not exceed five times the monthly salary of the claimant; and (b) it is 'in respect of services rendered by the (claimant) within a period of four months before the commencement of the winding up'. In this case, it was not disputed that the claims of the plaintiffs had complied with the first condition. However, with regard to the second condition, the defendants contended that the plaintiffs' claims had arisen only after and not before the appointment of the receivers.

Held, allowing the plaintiffs' claims: (1) the court would adopt the approach suggested by the plaintiffs' counsel, ie in a claim for salary in lieu of notice of termination, it is not necessary to show that the 'salary' claimed is in respect of services rendered by the employee to the company within a period of four months before the commencement of the winding up of such company. In this regard, the plaintiffs' counsel relied on the maxim that the law does not compel a man to do that which he cannot possibly perform: lex non cogit ad impossibilia; (2) order in terms of the originating summons with interest on the sum of $74,759.19 at 10% per annum calculated from 6 September 1985 would be awarded to the plaintiffs.

Yip Hock Chye & Ors v Santan Engineering Pte Ltd & Anor [1987] SLR 277 High Court, Singapore (Lai Kew Chai J).

The applicant was appointed a receiver of the company in question pursuant to powers contained in a debenture dated 5 November 1983 issued to Kwong Yik Bank Bhd ('the bank'). The receiver managed to recover from some insurance company a sum of $295,000. The Department of Royal Customs and Excise ('the department') not only claimed a sum of $103,520 being arrears of service tax inclusive of penalty for late payment, but also payment of the same in priority to all other claims including the claim for principal and interest from the bank as debenture holder in the sum of $560,480.72. The receiver sought directions from this court to approve a proposed order of priority at the bottom of which would be the department.

Held: the claim of the department is to be paid first before the claim for the said principal and interest of the debenture holder, ie the bank.

Re Golden Palace Musical Hall Sdn Bhd [1988] 2 MLJ 634 High Court, Ipoh (Peh Swee Chin J).

P were appointed the receivers and managers of M Sdn Bhd pursuant to a deed of debenture. To settle the debt due to the debenture holder, P sold a piece of land belonging to M Sdn Bhd. Following this, P applied under s 183(3) of the Companies Act 1965 for directions as to whether the debenture holder has priority of payment over the claim of the Director General of Inland Revenue for real property gains tax payable in respect of the sale of the land. In the instant case, the balance of the proceeds of sale was insufficient to pay the debenture holder in full if the tax was paid in priority to the debt to the debenture holder.

Held: (1) having regard to s 191 of the Companies Act 1965, it is clear that federal tax is not a priority claim. However, the federal tax involved in the instant case is a special kind of federal tax, that is, real property gains tax. By s 21B(1)(a) of the Real Property Gains Tax Act 1976, P, having been served with a notice of assessment, were required to set aside an amount equivalent to the real property gains tax payable for payment over to the Director General of Inland Revenue; (2) in the result, the court held that payment of the real property gains tax had priority over the amount due to the debenture holder under s 21B(1)(a) of the 1976 Act.

Raja Arshad bin Raja Uda & Anor v Director General of Inland Revenue Originating Summons No D2-31-174-1988 High Court, Kuala Lumpur (Siti Norma Yaakob J).

The plaintiff as receiver and manager ('receiver') of Rajiv Enterprises Sdn Bhd ('Rajiv') brought this summons to determine the order of priorities in which the three creditors of Rajiv are to be paid in relation to assets which had been realized. The plant and machinery of Rajiv, which were the subject of a fixed charge, were sold for RM144,000, and office equipment, which were the subject of a floating charge, for RM2,000. The moneys which now remain with the receiver amounted to RM138,444.12. Of the three creditors, the United Asian Bank Bhd ('the Bank') was owed approximately RM633,326.68 by way of debenture. The government of Malaysia was owed RM105,875.10 by way of sales tax for the years 1984 to 1986 and the employees of Rajiv ('the employees') were collectively owed RM138,290.44 due by way of termination benefits, annual leave pay, overtime pay, indemnity in lieu of notice and balance of wages.

Held, dismissing the application and granting priority to the government's claim for sales tax due: (1) the employees would not be entitled to be paid their claims out of the realizations of the fixed charge. Section 191 and s 292(c) of the Companies Act 1965 read together makes it clear that they would only be entitled to be paid out of the funds which had been realized from the assets subject to the floating charge only; (2) claims of the employees to annual leave pay, termination benefits, bonuses and indemnity in lieu of notice do not fall within the definition of 'workers' compensation' under s 191 of the Companies Act 1965 read together with s 292(c) of the Act. Only the balance wages accrued within four months prior to commencement of the receivership will be preferential debt to be paid out of the RM2,000 realized from the subject matter of the floating charges, with the employees participating pari passu; (3) in accordance with s 10 of the Government Proceedings Act, the sales tax debt, being a debt owed to the government, ranks in priority over the fixed charge of the debenture holders unless the latter's right arose by virtue of a mortgage or charge of immovable property duly registered. That was manifestly the case here. Anuarul Aini & Anor v Ketua Pengarah Kastam Dan Eksais Diraja Malaysia, Johore Bahru [1991] 1 MLJ 360 followed.

Abdul Samad bin Haji Alias (as receiver and manager of Rajiv Enterprises Sdn Bhd) v Government of Malaysia & Ors (1993) CSLR XVII[1037] High Court, Kuala Lumpur (Abu Mansor J).

X and Y, as receivers of D, terminated the services of P who were employees of D. Following a complaint made by P to the Commissioner for Labour under s 69 of the Employment Act 1955, D was ordered to pay P a sum of money being pro-rata bonus, termination benefits, leave pay and indemnity in lieu of notice. P sought a declaration that the above sum of money due to them from D ranked in priority to the debenture holders subject to s 191 read with s 292(1) of the Companies Act 1965.

Held, allowing P's application (1) in the instant case, the question is whether the termination benefits, pro-rata bonus, leave pay and indemnity in lieu of notice fall within s 292(1)(c) of the Act, being worker's compensation. The words used in s 292(1)(c) leaves sufficient scope to include compensation under any other written law. In the opinion of the court, compensation under s 69 of the Employment Act 1955 falls within the meaning of s 292(1)(c) of the Companies Act 1965; (2) for the above reasons, the court ruled that the amount due to P from D ranked in priority to the debenture holders.

Muniandy & Ors v Indo Malaysia Engineering Co Bhd [1990] 2 MLJ 104 High Court, Kuala Lumpur (Anuar J).

[Annotation: Reversed on appeal. See [1990] 3 MLJ 301.]

X and Y, as receivers of P, terminated the services of D, who were employees of P. Following a complaint made by D to the Commissioner of Labour under s 69 of the Employment Act 1955, P was ordered to pay D a sum of money being pro rata bonus, termination benefits, leave pay and indemnity in lieu of notice. D sought a declaration that the above sum of money due to them from P ranked in priority to the debenture holders subject to s 191 read with s 292(1) of the Companies Act 1965. The High Court found in favour of D holding that the sum in question was a preferential debt within the meaning of s 292(1)(c). Being dissatisfied with the decision of the High Court, P appealed to the Supreme Court.

Held, allowing the appeal: (1) for payments made under s 69 of the Employment Act 1955 to come within the purview of s 191(1) and be accorded priority under s 292(1)(b), they must necessarily be categorized either as wages, salary, vacation leave or superannuation or provident fund payments. If they can be so categorized, then they would rank in their respective order of priority in accordance with s 292(1)(b); (2) in the instant case, the payments in question did not come within the definition of wages in the Employment Act 1955. In the application of s 292(1) to s 191(1), wages and salary must be in respect of services rendered by an employee to the company. Pro rata bonus is not wages or salary. Similarly, termination benefits, which became due only after the termination of P's employment, are not wages for the purpose of s 191(1) read with s 292(1)(b). In regard to indemnity in lieu of notice, the payment was clearly not for work done or services rendered and was not paid before the appointment of receivers as contemplated by s 292(1)(b). In the result, none of these payments is wages for the purpose of s 191(1) read with s 292(1)(b) and therefore could not be paid in priority to any claim for principal or interest in respect of debentures; (3) in regard to s 292(1)(c), 'worker's compensation' referred to therein can only mean compensation payable under the Worker's Compensation Act 1952. Accordingly, payments made under s 69 of the Employment Act 1955 do not come within the purview of s 292(1)(c).

Indo Malaysia Engineering Co Bhd (in receivership) v Muniandy & Ors [1990] 3 MLJ 301 Supreme Court, Malaysia (Harun Hashim, Ajaib Singh and Jemuri Serjan SCJJ).

P were the receivers and managers of two companies appointed pursuant to the provisions of the debentures in question. The companies were insolvent and unable to meet all their outstanding liabilities. In view of the fact that the total proceeds of sale or realization of the assets of the companies were less than the total costs and expenses incurred by P, a direction of the court was applied for as to the priority for payment between the claims of the Employees Provident Fund Board and P's claims for receivership costs and expenses.

Held: (1) under the Companies Act 1965, the claims of the Employees Provident Fund Board do take priority over the claims of the debenture holder under a floating charge but they do not gain priority over the claims of the receivers and managers for receivership costs and expenses; (2) however, under s 15(a) and (b) of the Employees Provident Fund Act 1951, the sums due to the Employees Provident Fund Board must be paid first and are not liable to be attached in respect of any claim whatsoever including the claims by P as the receivers and managers; (3) accordingly, notwithstanding the provisions of the Companies Act 1965, the claims of the Employees Provident Fund Board take priority over the claims of P for their costs and expenses.

Chuah Teong Hooi & Anor, The Receivers and Managers of The Property of Atlas Intek (M) Sdn Bhd v Employees Provident Fund Board; Chua Teong Hooi & Anor, The Receivers and Managers of the Property of Atlas Electronics (M) Sdn Bhd v Employees Provident Fund Board [1990] 2 MLJ 218 High Court, Penang (Wan Adnan J).

Lee Choo Yam Holdings Sdn Bhd & Ors v Khoo Yoke Wah & Ors (Tai Kwong Goldsmith & Jewellers (under receivership); Saheran & Woon & Ors, Interveners) [1993] 3 MLJ 615 High Court, Kuala Lumpur (Anuar J).

Emar Sdn Bhd (under receivership) v Aidigi Sdn Bhd and another appeal [1992] 2 MLJ 734 Supreme Court, Malaysia (Harun Hashim, Mohamed Azmi and Edgar Joseph Jr SCJJ).

Northern Malaya Transport Co Ltd ('NMT'), a company under receivership, was issued with a summons for failing to contribute towards its Employees Provident Fund ('EPF'). The summons was received and acknowledged by the court appointed receiver and manager ('the receiver') for NMT. At the hearing of the proceedings against NMT, the receiver pleaded guilty to the charges against NMT and was convicted and fined by the magistrate's court. He paid the fine. In the instant criminal revision, the receiver submitted that he wanted to retract his plea of guilty and implored the court to revise the matter and remit the case to the magistrate's court for a rehearing.

Held, quashing the convictions and sentences against the receiver, and ordering that the case be remitted to the magistrate's court for a rehearing: (1) it is trite law that a discretion is vested in the trial court to allow an accused person, before sentence, to withdraw his plea of guilty and to substitute a plea of not guilty. Thus a plea of guilty can only be withdrawn before the trial court is functus officio. In the instant case, therefore, the receiver could not retract his plea of guilty as the magistrate's court was functus officio; (2) however, the magistrate's court had erred in law in failing to take into account the legal position of the receiver. Neither the party at whose instance a receiver is appointed nor any other third party may bring an action against that receiver while he is in office, save with the leave of the court; (3) the receiver was appointed by the court and was thus an official of the court. Hence, the leave of the court should have been obtained first before the receiver was brought before the magistrate's court to face the charges against NMT; (4) the receiver was neither an employee nor an agent of NMT. Thus he could not be personally liable for any malpractice of NMT; (5) consequently, as there was a failure to obtain leave of the court to proceed against the receiver, the court exercised its revisionary powers under Chapter XXXI of the Criminal Procedure Code and quashed the convictions and sentences against him and ordered that the case be remitted to the magistrate's court for a rehearing.

Northern Malaya Transport Co Ltd v Public Prosecutor (1994) CSLR XVII[581] High Court, Taiping (Abdul Malik Ishak JC).

On 13 January 1979, the plaintiff entered into a sale and purchase agreement with the defendant company, a housing developer, to purchase a lot together with a single-storey house to be erected thereon. The defendant expressly covenanted and agreed that the construction of the house would be completed and be ready for delivery to the plaintiff within 18 months from the date of execution of the agreement, ie on or before 13 July 1980. The plaintiff filed his writ on 15 January 1985 and even by that date the house was not ready. The plaintiff claimed specific performance of the agreement. In 1986 the defend ant was placed in receivership. On the date of the hearing of the summons, counsel for the defendant conceded there was no defence to the claim but disputed the right of the plaintiff to specific performance, liquidated damages and special damages as claimed.

Held: (1) if specific performance is granted, that would entail the receiver having to employ contractors to complete the house, incurring personal liability on the part of the receiver under s 183 of the Companies Act 1965 (Revised 1973). Failure to complete the plaintiff's house, which in effect means failure on the receiver's part, would put the receiver in contempt of court. It would be wrong for the court to order specific performance in the circumstances; (2) all that he would get would be the shell of a house, not fit for human habitation and of no commercial value so long as the housing estate remains uncompleted; (3) the facts show that the contract cannot be specifically enforced as the court will not be able to superintend the works required to complete the house. It is futile merely to order the completion of the house on the lot and the transfer of the property to the plaintiff;the remedy lies in damages for breach of contract. The plaintiff succeeds in his claim with costs save that this is not a proper case for granting specific performance.

Mohammad bin Baee v Pembangunan Farlim Sdn Bhd [1988] 3 MLJ 211 High Court, Temerluh (KC Vohrah J).

A receiver who is remunerated a percentage of his collection is not entitled to charge in addition to such remuneration sums paid by him for clerical assistance, salary of a bill collector, office expenses, stationary or lighting, though in a proper case the court might approve of a salary to a rent collector.

Re Chua Yan Keng's Trusts; Chua Lip Kee v Chua Lip Chee & Ors [1939] MLJ 9 High Court, Straits Settlements (Pedlow J).

In 1979 the defendant company created certain specific charges and a floating charge on all its undertakings, properties and assets in favour of the United Malayan Banking Corp. Bhd. On the floating charge crystallizing, receivers and managers were appointed in 1982. Soon after this appointment the receivers and managers came to an agreement with the plaintiffs regarding the sale of certain spare parts to the plaintiffs, the terms of which agreement were set out in a letter dated 11 March, 1982. The plaintiffs were granted a credit limit of $300,000 'on 60 days term', the credit facility to be secured by a bank guarantee to be provided by the plaintiffs, the bank guarantee becoming enforceable on the plaintiffs failing to comply with the terms. As at 19 September 1983, $136,759.50 was payable by the plaintiffs to the defendants, a demand was made and the plaintiffs threatened with an enforcement of the bank guarantee. The plaintiffs obtained an interlocutory injunction restraining the defendants from enforcing the guarantee. The plaintiffs claimed that they were entitled to set off the amount against what the defendant company owed them prior to the crystallization of the floating charge. The defendants applied to have the injunction set aside.

Held, setting aside the injunction: (1) the plaintiffs had not made candid disclosure of the position obtaining, in particular regarding the letter of 11 March, 1982. In the case of an injunction by an ex parte application, all the facts must be laid before the court, otherwise the order may be set aside without regard to the merits; (2) the plaintiffs were estopped from restraining the defendants from enforcing the bank guarantee if, in fact, there had been a failure to comply with the credit terms. The circumstances that caused the letter of 11 March 1982 to be written suggested that the parties had agreed to treat the post-receivership transactions separate from the pre-receivership transactions; (3) even in the absence of such an arrangement set off would not have been allowed. What was owing to the plaintiffs arose out of a pre-receivership transaction, whereas what was owing to the defendants arose out of a post-receivership transaction under a different contract. The courts will not allow a set off between debts arising before the receivership and debts arising afterwards.

Italian-Thai Development Corp Ltd and Italian-Thai Kenneison Joint Venture v United Manufacturers Sdn. Bhd. (in receivership) [1984] 1 CLJ 366 High Court, Kuala Lumpur (VC George J).

Malaysian Ropes Sdn Bhd v Malaysian Prestressed Concrete Strand Manufacturing Sdn Bhd & Ors [1992] CSLR X 133 High Court, Kuala Lumpur (Zakaria Yatim J).

In this case, Soon Hup Seng Sdn Bhd (company in liquidation) borrowed $154,000 and $35,000 from United Malayan Banking Corp Bhd on security of land by creating a first and second charge on that land. Later the company executed a debenture to borrow another $100,000 from the bank by way of floating charge on all its movable and immovable properties with power to appoint a receiver under certain contingencies. The charges were duly registered under the Companies Act 1965 (Act 125) and the National Land Code 1965 (Act 56/1965). Meanwhile a creditor of the company M/s Sin Min Auto (Pte) Ltd obtained a decree against the company for $41,328.77 with costs. The judgment creditor took proceedings by way of attachment in execution and obtained a prohibitory order against the said land in April 1982. The said prohibitory order was extended from time to time. On 8 January 1983, the bank appointed a receiver of the company's properties. Clause 13 of the debenture contained a power of attorney appointing the receiver as an agent of the company. The receiver's attempts to sell the land were aborted because of the prohibitory order obtained by the creditor. On 24 January 1983, the creditor filed a winding-up petition against the company which was ordered to be wound up on 29 June 1983. The bank applied to the court for directions by way of an originating summons.

Held: (1) notwithstanding registration of the debenture under the Companies Act the bank should have registered the debenture under the Powers of Attorney Ordinance 1949 as a condition precedent to the effectiveness of the receiver's agency; (2) assuming the receiver's agency to be valid, the liquidation of the company did not terminate his right to sell the property; (3) the receiver accordingly was entitled to sell the land and use the proceeds to satisfy the bank's debt. The surplus was to be paid to the liquidator.

United Malayan Banking Corp Bhd v Official Receiver and Liquidator of Soon Hup Seng Sdn Bhd & Anor [1986] 1 MLJ 75 High Court, Johore Bahru (Shankar J).

A, a shareholder of D, applied to have another lot of 15,000 shares, which he had purchased from a director of D, transferred into his name. The board of directors of D unanimously decided to reject it as a transfer would affect the bumiputra equity in D. A then applied to the court to seek its discretion under s 162(2) of the Companies Act 1965 to rectify the register of members of D by registering his name as the holder of another 15,000 shares in D. In refusing to register the shares, the directors of D were acting under art 30(b) of the articles of association which gave them absolute and uncontrolled discretion to do so. The main issue before the court was whether the directors had exercised their discretion mala fide in refusing to register the transfer of shares in the name of A.

Held, dismissing A's application: (1) in the instant case, as the refusal of the directors to register the transfer of the shares in the name of A was made for the sole purpose of endorsing the government's policy to encourage active bumiputra participation in private businesses such as the ones carried on by D, it could not be said that the exercise of the discretion on the part of the directors was for any ulterior motive but solely with the interests of D in mind. Accordingly, it could not, therefore, be said that the directors had exercised their discretion mala fide; (2) in the instant case, the director who sold the shares to A had affirmed that he did not write or speak English. As his affidavit did not contain any jurat, it could not be used as evidence under ord 41 r 3 of the Rules of the High Court 1980. The learned judge was, however, of the opinion that under r 4 of the same order, such a defective affidavit may be used in evidence with the leave of the court; (3) in any event, as the directors had exercised their discretion bona fide and there was no evidence to the contrary, the application of A was dismissed by the learned judge.

Mohan a/l Paramsivam v Sepang Omnibus Co Sdn Bhd [1989] 1 MLJ 247 High Court, Kuala Lumpur (Siti Norma Yaakob J).

Sing Eng (Pte) Ltd v PIC Property Ltd [1990] SLR 81 Court of Appeal, Singapore (Wee Chong Jin CJ, Lai Kew Chai and Thean JJ).

D had applied to the High Court for rectification of the register of members of P by having their names registered as owners of certain shares that had been transferred to them. At the time of application, D were already members of P as they were the owners of other shares in P. D alleged that the directors of P had exercised their discretion mala fide in refusing to register the transfer. The directors of P contended that they had refused to do so to avoid any contravention of the Industrial Co-ordination Act 1975. The High Court gave judgment in favour of D. Dissatisfied with the decision, P appealed to the Supreme Court.

Held, allowing the appeal: (1) in the instant case, the articles of association of P conferred an absolute discretion on the directors to refuse registration of any transfer of shares, be it from member to member or member to non-member and the directors may refuse to register any transfer to a person (whether a member or not) of whom they do not approve. There is nothing in law to limit the restrictions which a company's articles may impose on the right of transfer; (2) in the instant case, the non-Malaysian shareholding of P was more than 51% and there was a breach of the condition of the manufacturing licence under the 1975 Act. There was, thus, a real likelihood of P losing its manufacturing licence if the registration was allowed. The refusal of the directors to register the transfer was, accordingly, for the well being of P: (3) in the circumstances, the High Court should not have interfered with the proper exercise of the directors' discretion in the absence of evidence that they had acted mala fide. In the result, P's appeal was allowed by the Supreme Court.

Kwality Textiles (Malaysia) Sdn Bhd v Arunachalam & Ors [1990] 3 MLJ 361 Supreme Court, Malaysia (Hashim Yeop A Sani CJ (Malaya).

The appellants, members of the company, sought under s 101 of the Companies Ordinance to rectify the register of members. Their application was refused by the learned trial judge. The main grounds of appeal were that: (1) there was no room for the exercise of discretion by the court, (2) while the learned judge had a discretion, it was a discretion to be exercised on legal grounds and that no sufficient legal grounds existed in this case, and (3) the learned trial judge's attention was not drawn to the fact that the decision in Bellerby v Rowland & Marwood's Steamship Co Ltd [1901] 2 Ch 265 was reversed by the Court of Appeal.

Held: (1) even in the case of an invalid allotment of shares there is a discretion in the court whether or not to order rectification of the register of members; (2) there were grounds upon which the learned trial judge was able to exercise his discretion, and in this case the discretion was properly exercised; (3) the reversal of the decision in the above said case does not affect the correctness of the principles enunciated in that case on the question of the exercise of the court's discretion in cases where it is not sought to validate anything which is illegal, null and void.

Re Asian Organisation Ltd [1961] MLJ 295 Court of Appeal, Singapore (Tan Ah Tah Ag CJ, Chua and Ambrose JJ).

A dispute arose between the defendant, the plaintiff and the third party regarding the sale of shares. The third party had sold the shares to the defendant, who in turn sold them to the plaintiff. It was alleged that these shares were not properly transferred. Judgment was entered against the defendant by consent. The third party applied to have the third party notice struck out. The court declined to do so and allowed the defendant to enter summary judgment against the third party, who appealed.

Held: there were triable issues as between the parties and summary judgment against the third party should not have been entered. (1) in the present case the company concerned had taken upon itself to rectify its register of members without any application to court. The expulsion of a member from the register is a serious matter and the company cannot take upon itself the responsibility of doing so; (2) an application for rectification under s 162 of the Companies Act 1965 (Act 125) cannot be granted where there are serious disputes regarding title and the issues cannot be properly decided in the summary proceedings under the section; (3) delay is a material consideration. Undue delay may prejudice an application for rectification.

Central Securities (Holdings) Bhd v Haron bin Mohamed Zaid [1979] 2 MLJ 244 Federal Court, Kuala Lumpur (Suffian LP, Raja Azlan Shah CJ (Malaya).

In this case, the applicant applied for an order under s 162 of the Companies Act 1965 (Act 125) that the register of members be rectified. The applicant claimed to be the registered owner of the disputed shares in the respondent company. In September 1957, she went to see a director of the company and informed him that she intended to give a power of attorney to her mother in relation to her shares. Subsequently the mother obtained a share transfer form and gave that to the director for the applicant to sign. The director then requested the applicant to sign the transfer form saying that it was to effect a power of attorney. It was only after the death of her mother in 1963 that the applicant discovered that her shares had been transferred to and registered in her mother's name. It was not till December 1968 that this application was made.

Held, dismissing the application: (1) the court has a discretion to give a summary remedy under s 162 of the Companies Act 1965, but would not normally entertain such an application if the facts are as in this case, complex and disputed; (2) in this case the application was not made within a reasonable time after the applicant became aware of the facts entitling her to relief and the application must therefore be dismissed for laches.

Re Len Chee Omnibus Co Ltd; Chin Sow Lan v Lee Chee Omnibus Co Ltd & Ors [1969] 2 MLJ 202 High Court, Kuala Lumpur (Raja Azlan Shah J).

Chung Khiaw Bank Ltd v Four Seas Communications Bank Ltd [1965] 2 MLJ 74 High Court, Singapore (Ambrose J).

In this case, the appellants had purported to serve a writ on 1 July 1982 on the respondent company at an address which they believed to be the registered address of the company. The respondent company had in fact changed its registered address and the change had been notified to the Registrar of Companies on 20 February 1982. The notification of change was not, however, entered into the register until 24 September 1982. When no appearance was entered to the writ the appellants obtained judgment in default and execution proceedings were taken. The respondents when they came to know of the writ subsequently applied to have the writ set aside. The learned trial judge gave judgment for the respondents and the appellants appealed.

Held, dismissing the appeal: (1) the effective date of the change of the registered address is the date of the lodgment of the notice to the Registrar of Companies; (2) the learned trial judge was correct in holding that there had been no good service of the writ in this case and in setting aside the judgment.

Summit Co (M) Sdn Bhd v Nokko Products (M) Sdn Bhd [1985] 1 MLJ 68 Federal Court, Kuala Lumpur, Malaysia (Salleh Abas LP, Wan Suleiman and Seah FJJ).

Kwong Kum Sun Chan Glass Merchant v Ahong Construction Co (Malaya) Ltd [1968] 1 MLJ 29 High Court, Kuala Lumpur (Pawan Ahmad J).

MUI Bank Bhd v Golden Hornbill Hotel Sdn Bhd Companies 1993 High Court, Kuching (Chong Siew Fai J).

In this case, there was a dispute over the shareholdings and the directorship of two companies. The learned trial judge made an order granting the application to deposit with the senior assistant registrar of the High Court all files, minutes and other documents together with the common seals of the two companies until the final disposal of the suit with liberty to apply. The appellants appealed against the order and it was argued that (a) the order negates the effect of the order of the High Court which allowed the appellants to carry on as the companies' lawful directors and (b) the order was contrary to s 157 of the Companies Act 1965 (Act 125) which imposes a statutory duty on the directors to have in their custody the documents and the common seals of the companies.

Held: (1) for the purpose of preserving the integrity of documents in dispute or relevant in a dispute, O 29 r 2(1) of the Rules of the High Court 1980 should be construed to include any document the authenticity of which would be a crucial issue in an action. Order 29 r 2(1) confers powers on the judge to make the order as she did and it was not wrong in law for the judge to have exercised her discretion under the circumstances; (2) s 157 of the Companies Act 1965, which directs that the books containing the minutes of the proceedings of any general meeting shall be kept by the company at its registered office or its principal place of business and that such minutes shall be open for inspection by any member without charge, does not override or exclude the power of the court in appropriate cases to make an order to protect the integrity of documents which will be relevant for the proper determination of a dispute; (3) in the present case it is obvious that there are disputes (a) over the shareholdings and the directorship of the companies, (b) as to the control of the registered office of the companies, and (c) as to who is the proper secretary of the companies. Apart from the first appellant and the first respondent there is only one other member of the companies. Under the circumstances, the most appropriate repository for the documents would be the court; (4) the order of the judge should not have included the depositing of the common seals of the company so as to affect the day-to-day running of the affairs of the company and the order is accordingly varied to that extent.

Datuk Ong Kian Seng & Ors v Yeong Kok Chun & Ors [1984] 2 MLJ 117 Federal Court, Kuala Lumpur (Wan Suleiman, Mohamed Azmi and Hashim Yeop A Sani FJJ).

Pestmasters Pte Ltd v Pestbusters Pte Ltd [1997] 1 SLR 377 Court of Appeal, Singapore (Yong Pung How CJ, Karthigesu and LP Thean JJA).

Tan Tien Kok v Medical Specialist Centre (JB) Sdn Bhd [1994] 3 MLJ 469; CSLR IX[757] High Court, Johor Bahru (Mohd Ghazali JC).

The defendant company's board of directors passed a resolution ('the resolution') authorizing the defendant company to sell a piece of property ('the property'). The resolution also authorized the chairman of the defendant company, Khoo Teng Shin ('Khoo') to grant options to interested parties to purchase the property. Khoo then granted an option to the plaintiff and entered into an agreement on behalf of the defendant company to sell the property to the plaintiff ('the agreement'). The defendant company subsequently refused to recognize the agreement. The plaintiff applied for summary judgment for the specific performance of the agreement under O 81 of the Rules of the High Court 1980. The defendant company firstly alleged that since the resolution had only authorized Khoo to grant options, he had no authority to enter into the agreement. The defendant company then argued that the property formed a substantial asset of the defendant company and there was no approval for the sale of the property at a general meeting of the defendant company. Accordingly, the defendant company claimed that s 132C(1) of the Companies Act 1965 had been contravened. The defendant company lastly contended that since the common solicitors for the agreement had requested all the defendant company's directors to execute the necessary documentation after the execution of the agreement, this implied that the defendant company's approval for the agreement had not been granted.

Held, allowing the application: (1) Khoo acted well within the ambit of the resolution. The option granted by Khoo as specified in the resolution, was binding on the defendant company. Consequently, when the option was acted upon by the grantee as was in this case, the option to purchase then automatically crystallized into a full agreement to purchase; (2) a resolution properly passed as in this case, was binding on the defendant company and until it was dissolved, cancelled or annulled, expressly or by implication, it bound the defendant company on actions taken by Khoo; (3) the plaintiff had no notice of the contravention of s 132C(1) of the 1965 Act and since the agreement was for valuable consideration, the transaction was valid under s 132C(3) of the 1965 Act; (4) the execution of necessary documentation is an act that is required to be carried out by a vendor in a sale and purchase of landed property. This, however, does not mean that the agreement for the sale and purchase of the property has not been completed. The execution of necessary documentation is a subsequent act and if it is not performed, the purchaser is entitled to seek specific performance of the sale and purchase agreement which stays valid at all material times.

Chan Thiam Teng v Ban Swee Heng Sdn Bhd [1992] 2 MLJ 583 High Court, Johore Bahru (James Foong J).

David Lau Tai Bek v Lau Ek Ching Sdn Bhd [1972] 1 MLJ 217 High Court, Ipoh (Sharma J).

Goh Kim Hai Edward v Pacific Can Investment Holdings Ltd [1996] 2 SLR 109; (1996) CSLR VI[28] High Court, Singapore (Judith Prakash J).

Dato' Toh Kian Chuan v Swee Construction and Transport Company (Malaya) Sdn Bhd [1996] 1 MLJ 730; (1996) CSLR X[665] High Court, Johor Bahru (Mohd Ghazali J).

The plaintiffs were shareholders in a company, Britannia Holdings Pte Ltd (BHPL) under a Subscription Agreement dated 30 October 1991. They held, at the material time, 16,794,585 shares in BHPL. By a Shareholders' Agreement also dated 30 October 1991 entered into between the plaintiffs and the other shareholders, including the second defendants, all the parties thereto agreed that the affairs of BHPL would be regulated by the provisions of the Shareholders' Agreement. On 26 August 1992 the first defendants offered to purchase each of the four plaintiffs' shares in BHPL at the price of S$2.28 per share, and the price totalled S$38.28 million (in round figures). The completion date was agreed to be 7 October 1992. Central to the disputes between the parties was the true and proper construction of the provisions of cl 8.2 of the Shareholders Agreement which govern the transfer of shares in BHPL. The clause reads: '8.2 Supplementary Provisions It shall be a condition precedent to the right of any shareholder to transfer shares that the purchaser or other transferee whatsoever (if not already bound by the provisions of this Agreement) executes, in such form as may be reasonably required by and agreed between the other shareholders, a deed of ratification and accession under which the purchaser or transferee shall agree to be bound by and shall be entitled to the benefit of this Agreement as if an original party hereto in place of the transferring Shareholder. The Company shall not register any purchaser or transferee as the holder of any shares unless such a deed of ratification and accession has been executed by such purchaser or transferee.' In contemplation of completion the plaintiffs prepared the draft Deeds of Ratification and Accession to be executed by the first defendants. Having noticed that one Rajan Pillai and BHPL were not to be added as parties to the Deeds, the first defendants refused to execute the Deeds. Both Rajan Pillai and BHPL, the company itself, were 'non-shareholders'. By reason of the differences of views the Deeds as tendered by each of the four plaintiffs were not executed on 7 October 1992 and the first defendants refused to complete the purchase of the shares from the plaintiffs. In the end, the sale and purchase was completed pursuant to an order for specific performance which was made on 20 November 1992. As of 6 October 1992 the plaintiffs had not obtained the requisite consent of the shareholders and because of this the first defendants refused to complete.

Held, declaring the first defendants in breach of the Sale and Purchase agreement: (1) upon a reading of the relevant provisions in the Shareholders' Agreement, it was evident that cl 8.2 provided a contractual mechanism for a novation of the Shareholders' Agreement to take place. In common with such agreements, cl 8.2 would only come into play after the other shareholders had waived their rights of pre-emption which were provided in the preceding cl 8.1 of the Shareholders' Agreement. The effect of the text in cl 8.2 taken in the context of such agreements which were entirely common and not unfamiliar, made it abundantly clear that the intention of all the parties to the Shareholders Agreement, whether original parties or who later were to become shareholders under the process of novation under cl 8.2 was that a purchaser or a transferee who has duly executed the deed under cl 8.2 'shall be entitled to the benefit' of the Shareholders' Agreement; (2) the plaintiffs' obligation was to obtain the consent before the registration of the transfer, which as an event must be preceded by the due execution of the Deeds. On the facts the court was convinced that if the first defendants had consented to the form of the Deeds on 6 October 1992, the plaintiffs would have obtained the consent from the other shareholders to register the transfers; (3) the first defendants were thus in breach of the Sale and Purchase Agreements evidenced by the respective letters of offer dated 26 August 1992 to each of the plaintiffs and the respective letters of confirmation of acceptance dated 29 August 1992 from the first defendants when and consequent upon their failure to execute the respective Deeds of Ratification and Accession, the form of which was annexed to the Originating Summons. The first defendants were ordered to pay the plaintiffs interest on the purchase price at 8% per annum from 7 October 1992, which was the contractual date of completion, to 29 November 1992, the date on which the parties completed the sale and purchase of the shares, by way of damages.

Asian Capital Partners Ltd & Ors v Compagnie Gervais Danone & Anor Originating Summons No 956 of 1992 High Court, Singapore (Lai Kew Chai J).

In this case, the court had to consider whether the name of the plaintiff company was being used without authority and solicitors were appointed in violation of s 139(5) of the Companies Act 1965. Section 139(5) stated that 'a provision ... authorizing a thing to be done by ... a director and the secretary shall not be satisfied by its being done by ... the same person acting both as director and as, or in place of, the secretary'.

Held: It is clear that s 139(5) of the Companies Act 1965 only comes into play where the company has only one director. In the present case, the company has five directors and one of the directors, namely, Tan Boon Chiong , is the director cum secretary.

Sharikat Import Dan Export & Perindusterian Timbering Sdn Bhd v Othman bin Taib Civil Suit No 32 of 1972 High Court, Muar (Pawan Ahmad J).

The appellants and the respondents were shareholders in a private company. The former owned 32% of the shares and the latter had a total of 51% of the shares. The respondents authorized the first respondent to negotiate the sale of all their shares in the company to the highest bidder. The first respondent in turn authorized the secretary of the company to make offers to the existing shareholders to purchase all the said shares. The secretary accordingly sent out letters of offer. The appellants received the letter from the secretary to the effect that the respondents had decided to sell their 51% shares at $17 per share. The appellants accepted the offer to purchase all the said shares and informed the secretary by letter. The secretary communicated this to the respondents but the respondents subsequently refused to effect the sale of the shares. The appellants filed a writ claiming specific performance, damages for breach of contract, injunction and other reliefs. The learned trial judge heard the application in chambers and allowed it but subsequently after hearing in open court, he dismissed it. The learned trial judge held that the letter written by the first respondent to the secretary of the company was a transfer notice as required by art 24(b) of the company's articles of association and with that notice the company became his agent for the sale of the shares. The learned trial judge, however, held that the secretary had no power to act for the company in respect of the sale of the respondents' shares on the ground that he had no authority to write the letters of offer to the appellants and the letter to the first respondent and in doing so he was acting ultra vires the articles of association. The learned trial judge therefore held that there was no valid and enforceable contract for the sale of the shares and he dismissed the plaintiffs/appellants' application. The applicants appealed.

Held, allowing the appeal (Wan Hamzah SCJ dissenting): (1) the learned trial judge was correct in holding that the letter written by the first respondent to the secretary of the company was a transfer notice as required by art 34(b) of the company's articles of association; (2) a company secretary normally has no power to make commercial decisions on a company's behalf. However, in this case according to the relevant records the secretary was acting on the orders of the company with full authority based on the resolution of the board of directors. In furtherance of the authority given, the offer of sale was sent out to the shareholders including the appellants by the secretary in his capacity as the secretary of the company and not on his own behalf. In other words, he was acting on behalf of the company and what he did was to carry out the decision of the board; (3) the letter of offer was accepted by the appellants to buy the said shares. A contract was therefore formed; (4) there were no other triable issues and the evidence before the learned judge was sufficient for him to come to a decision. The appeal should be allowed and an order for specific performance made; (5) since it was the fault of the respondents, the appellants are not bound to pay interest and for the same reason the appellants are entitled to the profits earned by the company.

Mohamed bin Othman & Anor v Abdul Shattar bin Abdul Rahim & Ors [1987] 2 MLJ 695 Supreme Court, Kuala Lumpur (Salleh Abas LP, Syed Agil Barakbah and Wan Hamzah SCJJ).

Yap Sing Hock & Anor v Public Prosecutor [1992] 2 MLJ 714 Supreme Court, Malaysia (Abdul Hamid Omar LP, Peh Swee Chin SCJ and Anuar J).

This case concerns the proper application of reg 8 of the Employment (Termination and Lay-Off Benefits) Regulations 1980. All the shareholders of the respondent company by a written agreement sold and transferred their entire shares to a certain buyer in 1981. The main asset of the company consisted of land on which the company appeared to have carried on the business of a rubber estate and oil palm. In November 1982, a claim, said to be for April 1982, was initiated under s 69 of the Employment Act 1955 (Act 265) for termination benefits under reg 8. The point in dispute was whether the estate was sold and if so whether a change of employer took place.

Held, dismissing the applicants' appeal: an incorporated company is a legal person separate and distinct from the shareholders of the company. In the present case there was no change whatsoever in the constitution of the respondent company. The company did not change its identity or personality. It continued to own all the assets of the estate which were an integral part of the business for the purposes for which the applicants were employed.

Abdul Aziz bin Atan & Ors v Ladang Rengo Malay Estate Sdn Bhd [1985] 2 MLJ 165 High Court, Muar (Shankar J).

The plaintiff applied for discovery and inspection of books of the third defendants, who were bankers, in respect of the accounts of the other defendants with the bank. The defendants opposed the application on the ground that it was irrelevant.

Held: (1) the main object of the provisions of the Bankers' Books (Evidence) Act 1949 (Act 33) is to enable evidence to be procured and given and to relieve bankers from the necessity of attending and producing their books. They do not give any new power of discovery or alter the principles of law or the practice with regard to discovery; (2) in this case the accounts sought to be inspected are the accounts of a different company with limited liability and registered under the Companies Act 1965 (Act 125), albeit the two directors are the same persons. Furthermore the question of in what circumstances a court could order inspection of accounts of third parties has been considered in many leading cases and it has been held that the jurisdiction of the court in such matters must be exercised with great caution; (3) it is settled law that in an application of this nature if the opposite party states on affidavit that the information sought is irrelevant, it is final and the court should not at this stage question it.

Goh Hooi Yin v Lim Teong Ghee & Ors [1977] 2 MLJ 26 High Court, Penang (Arulanandom J).

P had a current account with its bank, D. D had received bills of lading drawn in favour of P. D however credited the money to the account of N Holdings Sdn Bhd and not P's account. P claimed that D did not have its prior authorization to credit the money to N Holdings Sdn Bhd's account. P applied for summary judgment against D for money duly received by D but had not been credited to P's account. D alleged that X, the managing director of both P and N Holdings Sdn Bhd, had authorized D to credit all bills of lading drawn in P's favour, to N Holdings Sdn Bhd's account. D was a subsidiary company of N Holdings Sdn Bhd. D argued that the corporate veil of P and N Holdings Sdn Bhd should be lifted. The learned senior assistant registrar dismissed P's application for summary judgment and P appealed to the High Court.

Held, allowing the appeal: (1) there was no evidence that P had authorized D to credit the bills of lading to N Holdings Sdn Bhd's account; (2) the court will lift the corporate veil if justice demands it. There was no evidence in this case to justify the lifting of the corporate veil. In law both P and H Holdings Sdn Bhd are two separate entities although P was a subsidiary of N Holdings Sdn Bhd.

NKM Trading Sdn Bhd v Bank Buruh (M) Bhd (1990) CSLR I[129] High Court, Kuala Lumpur (Zakaria Yatim J).

P supplied orange juice to a 'Richard's Catering Services', which was the caterer for Tanah Merah Country Club ('TMCC'). D1 and D2 were partners in the firm Richard's Catering Services ('RCS'). There was, however, a company by the name of Richard's Catering Services Pte Ltd ('RCSPL'), in which D1, L, C and M were directors and members. P sued D1 and D2 as partners of RCS. The defence was that the contract was made with RCSPL and not RCS.

Held, dismissing P's claim: (1) the district judge accepted the evidence of the defendants that RCS was dormant although it had not been de-registered. RCS and RCSPL were separate legal entities; (2) the evidence showed that TMCC had retained RCSPL as their caterers. Therefore, P's contract must have been with RCSPL. The claim against D1 and D2 as partners of RCS was therefore dismissed.

Sunfresh Singapore Pte Ltd v Loo Chee Fong & Anor District Court Appeal No 3 of 1989 District Court, Singapore (Tan Siong Thye, District Judge).

Tan Tien Kok v Medical Specialist Centre (JB) Sdn Bhd [1994] 3 MLJ 469; CSLR IX[757] High Court, Johor Bahru (Mohd Ghazali JC).

A1 was the managing director and a substantial shareholder of SBCPL. A2 was the managing director and a substantial shareholder of WKCPL. Both companies had common shareholders. A1 was charged with five counts of criminal breach of trust and six counts of abetment of CBT. A2 faced five abetment charges and nine charges of CBT. The charges were in respect of funds siphoned off from the two companies by A1 and A2. This was done through a scheme of fictitious contracts with T, an innocent party. The moneys received were distributed among the shareholders. The defence on the charges essentially was that the money represented the accused's share of the companies' profits. The trial judge convicted the accused. A1 was sentenced to eight months' imprisonment on each of the 11 charges, the sentences to run concurrently. A2 was sentenced to ten months' imprisonment on each of the nine CBT charges and to eight months' imprisonment on the abetment charges, the sentences to run concurrently. They appealed to the High Court.

Held, dismissing the appeal: (1) a person in total control of a limited liability company by reason of his shareholding and directorship, or two or more such persons acting in concert, are capable in law of stealing the property of the company; (2) in this case the purpose of the scheme to draw moneys out of the company was not only to avoid income tax but also to enable the perpetrators to make an earlier distribution of these profits. Instead of doing this in the proper way by declaring dividends, the accused had done so by means which were not denied to be irregular. The scheme was improper, dishonest and illegal and the companies had suffered wrongful loss; (3) the defence that the sums withdrawn represented profits was untenable. The act of appropriation was dishonest. The accused had caused wrongful loss to the companies by procuring the payment out of money on contracts that did not exist. If the money was to have been taken as profits, the proper procedures in the Companies Act had to be followed. Had the accounts been properly audited, the accused's entitlements would have been less than what they arrogated to themselves. The appeals were accordingly dismissed.

Lai Ah Kau & Anor v Public Prosecutor [1988] SLR 735 High Court, Singapore (Chua J).

P had earlier attached the property in question which they had seized on the premises in execution of the judgment obtained by them against D. N had subsequently made a claim before the senior assistant registrar for the property attached contending that they were the actual owners of the attached property. X, who was subsequently made the managing director of N, and four others had purchased from D chattels and cloth materials for the purpose of contribution of their respective capital in N. The purchase was effected a day before N were incorporated. Two days after N were incorporated, D was wound up. N had since then become the tenant of the premises and had purchased more cloth materials from other suppliers. The managing director of N had worked for D for 16 years before the latter was wound up. In the instant case, N were in occupation of the premises at the time of the attachment but which at the time of the judgment was occupied by D. The senior assistant registrar rejected the claim of N on the ground that there was no bona fide purchase in the circumstances. N appealed against the decision to the High Court.

Held, allowing N's appeal: (1) the only real issue was whether the goods attached belonged to N or D, the judgment debtor, at the time of the attachment by P. Having regard to the fact that N were in possession of the premises and the goods which were in it at the time of the attachment and the testimony from the other suppliers, the learned judge was of the view that the goods attached actually belong to N; (2) in a sheriff's interpleader, the claimant is as a general rule made the plaintiff and the burden of proof rests upon him where the goods seized were at the time of seizure in the possession of the judgment debtor, possession being prima facie evidence of title. However, in the instant case, as N were in possession of the goods at the time of seizure, the burden of proof was upon P to prove that D, the judgment debtor, were the actual lawful owners of the goods attached but that they had failed to do; (3) on the authority of Salomon v Salomon & Co Ltd, N, which had been lawfully incorporated, had a separate legal entity from D. There was accordingly no merit in P's contention that despite the incorporation of N, the managing partner of D was actually the person running it through his relatives and former employee. In any event, the managing director of D was not even a director or shareholder of N and he could not therefore be held to be in control of N at all; (4) although an appellate court should be slow to interfere with the decision of the presiding officer who saw and heard the witnesses, it is nevertheless the duty of the appellate court to interfere where it has been shown that the presiding officer had misdirected himself on the facts or evidence or had drawn an inference which cannot be supported; (5) for the above reasons, the learned judge held that N had in fact and in law succeeded in establishing that they were the lawful tenants of the premises and the actual lawful owners of the attached property seized by P on the premises. The appeal of N was, accordingly, allowed; (6) however, as P were given leave to appeal against the learned judge's decision, P were granted a stay as regards the release of the goods attached to N to maintain the status quo of the parties pending the disposal of the appeal to the Supreme Court. The learned judge was of the view that irreparable injury might result to P if the stay was refused and the condition set by granting the stay would compensate N if P's appeal was dismissed subsequently.

Development & Commercial Bank Ltd v Lam Chuan Company [1989] 1 MLJ 318 High Court, Ipoh (Abdul Malek J).

In this case, the People's Insurance Company (M), a Malaysian company, was a subsidiary of the People's Insurance Co Ltd registered in Singapore. Four senior officers of the holding (parent) company were also directors of the subsidiary. The auditors of the subsidiary company had expressed a view that the sum of $2,001,725 provided for claims for policies issued from 1 October 1975 to 30 September 1976 might not be sufficient to meet claims arising from such policies. The matter was placed before the board meeting of the subsidiary where at the instance of those four directors it was resolved that the parent company would guarantee any shortfall in excess of $2,001,725. There was a shortfall of $2,817,395 and the subsidiary company sought to recover the amount from the parent company. The parent company, the first defendant in the present case, denied any liability. The subsidiary company then filed a suit against the parent company and the four directors. The plaintiffs obtained an order from the senior assistant registrar allowing them to issue a notice of writ and to serve it on all defendants in Singapore under O 11 r 1 of the Rules of the High Court 1980. The present application was made by the defendants to set aside the order of the senior assistant registrar.

Held, allowing the application: (1) the parent (holding) and subsidiary companies are two separate legal entities; (2) officers of the parent company who are on the board of the subsidiary are not representatives of the parent company but sit at the board meeting as directors and agents of the subsidiary; (3) a resolution of the board of directors of the subsidiary does not bind the parent company. The resolution did not constitute a contract between the parties; (4) in order to obtain leave from the court to serve their writ out of jurisdiction under O 11 r 1 it is necessary for the plaintiffs to show that they have a cause of action. In this case the plaintiffs have failed to satisfy this requirement.

People's Insurance Co (M) Sdn Bhd v People's Insurance Co Ltd & Ors [1986] 1 MLJ 68 High Court, Kuala Lumpur (Zakaria Yatim J).

Dato Mak Kok & Ors v See Keng Leong & Ors (1989) CSLR IX[2] High Court, Kuala Lumpur (Zakaria Yatim J).

The second respondent company, Saga Prestige Sdn Bhd was a wholly-owned subsidiary ('the subsidiary') of the first respondent company, First Profile (M) Sdn Bhd ('the holding company'). All the directors of the subsidiary were nominees of the holding company. By an agreement dated 16 October 1991 ('the agreement'), the holding company agreed to sell to the appellant all the paid-up shares of the subsidiary for RM6,193,000. A sum of RM100 was paid as deposit and part payment of the purchase price. The appellant alleged that although the agreement was for the sale and purchase of shares, it was in fact an acquisition of four pieces of land ('the lands') owned by the subsidiary, which were expressly spelt out and particularized in the agreement. It was provided in the agreement that the holding company intended to build schools on the lands and was to submit an application to Dewan Bandaraya Kuala Lumpur for a development order within three months from the date of the agreement. It was further provided that the agreement was conditional upon the development order not being obtained by the holding company within 15 months from the date of its application, ie on or before 16 April 1993. It seemed that the holding company did not manage to obtain the development order by 16 April 1993. This meant that the conditional agreement had become unconditional. However, it appeared that on 13 April 1993, ie three days before the cut-off date, the holding company returned the deposit and part payment to the appellant and purported to terminate the agreement. The appellant filed an action on 30 June 1993 claiming, inter alia: (i) a declaration that the holding company had committed anticipatory breach of the agreement; (ii) specific performance; and (iii) an injunction restraining the holding company from disposing of the shares of the subsidiary. The appellant had also applied for an interlocutory injunction to restrain the holding company from disposing of or otherwise dealing in any manner whatsoever with any of the lands registered in the name of the subsidiary. The trial judge refused the appellant's application for interlocutory injunction with costs, on the grounds that: (i) the holding company, being shareholder of the subsidiary, had no right to dispose of or deal with the lands of the latter; (ii) the injunction, even if granted, would not prevent the subsidiary from selling off the lands; and (iii) the appellant's fear that the holding company, through its directors or otherwise, would dispose of the lands to some third party was unfounded, as there was no evidence to show that the subsidiary intended to pass any resolution to deal with the lands. The appellant appealed. The main issues before the court were: (i) whether on the uncontroverted evidence, interlocutory injunction could be issued against the holding company in respect of properties owned by its subsidiary; and (ii) whether it was necessary for the appellant to invoke the doctrine of lifting the corporate veil of the subsidiary in this case.

Held, allowing the appeal: (1) by holding that the holding company had no right to dispose of or deal with the lands, the trial judge failed to appreciate the unchallenged evidence of the appellant that the directors of the subsidiary were the nominees of the holding company, and that the holding company wholly owned and was in control of the subsidiary; (2) the trial judge's considerations that the injunction, even if granted, would not prevent the subsidiary from disposing of the lands, and the lack of evidence indicating the intention of the subsidiary to pass resolution disposing of the lands, were irrelevant bearing in mind that the interlocutory injunctive relief sought was against the holding company; (3) the sole question was whether the appellant had made out a case warranting the grant of the relief against the holding company, which, on the evidence, the court found it had; (4) the material averments contained in the appellant's affidavits filed in support of the application were never answered and hence must be taken to have been admitted; (5) for all intents and purposes, the subsidiary was not only wholly-owned by the holding company, but was also controlled and managed by the holding company. Resolution to dispose of the landss, if any, would have been the doing of the holding company. However, the holding company did not provide any statement to dispel such fear or to suggest that this would not occur. On the other hand, the holding company had purportedly terminated the agreement prematurely, and returned the deposit and part payment. On the unchallenged evidence adduced by the appellant, the court considered that the appellant's fear was not without some basis; (6) from the balance sheet of the subsidiary and the valuation report, it did appear that the lands were the most valuable assets of the subsidiary. Therefore, there were merits in the assertions of the appellant that though the agreement was for the sale and purchase of all the shares of the subsidiary, it was in fact for the acquisition of the lands; (7) it was not necessary to invoke the doctrine of 'lifting the corporate veil' in the particular facts and circumstances of the present case. It was an undisputed fact that the subsidiary was wholly-owned by the holding company, and it had not been challenged that the holding company, by proxy - through its nominees - managed the subsidiary. Thus, the composition, type, shareholding and control of the subsidiary stood in front of the veil, and there was no need to lift the veil to unveil them; (8) in cases where there are signs of separate personalities of companies being used to enable persons to evade their contractual obligations or duties, the court would disregard the notional separateness of the companies; (9) on the authorities, it was clearly permissible in law to grant an interlocutory injunction restraining the actual controller and manager behind a company (as opposed to the company itself) from evading the contractual obligations or duties undertaken by the company. The fact that the company under control has not been restrained is, in itself, not a necessary bar from granting the relief against the controller and manager behind it; (10) in the light of all the evidence and circumstances, the court was of the view that there existed serious questions to be tried and that the balance of convenience lay in favour of maintaining the status quo of the situation until the trial of the action.

Sunrise Sdn Bhd v First Profile (M) Sdn Bhd & Anor [1996] 3 MLJ 533; (1996) CSLR I[142] Federal Court, Kuala Lumpur (Chong Siew Fai CJ (Sabah & Sarawak).

Bank Bumiputra Malaysia Bhd & Anor v Lorrain Esme Osman & Ors [1987] 1 MLJ 502 High Court, Kuala Lumpur (Zakaria Yatim J).

A holding company cannot sue to enforce its subsidiary's rights, nor is it liable for its subsidiary's breaches of contract or torts.

Hong Kong Vegetable Oil Co Ltd v Malin Sirinaga Wicker & Ors 1975 High Court, Singapore (Rajah J).

The plaintiffs claimed as owners of a cargo of fresh ginger which was shipped on the vessel 'Asean Promoter' for damages for loss of or damage to the cargo during its storage in Singapore for transshipment to Karachi. The 'Asean Promoter' was at the material time beneficially owned as respect all the shares therein by M & G Maritime Services Pte Ltd (M & G). On 27 March 1980, the plaintiffs requested for a warrant of arrest against the ship 'Asean Progress'. The defendants, the Straits Maritime Leasing Pte Ltd, was at the date the ship was arrested the owners of the 'Asean Progress'. It was not in dispute that the defendants and M & G were wholly owned subsidiary companies of Haw Par Brothers International Ltd (Haw Par). M & G was a shell company with a paid-up share capital of $2 both issued to Haw Par whereas the defendants' paid-up capital was $3m; all three companies shared common directors. The plaintiffs contended, inter alia, that in the circumstances the veil of incorporation should be lifted to reveal Haw Par as the beneficial owners of both the 'Asean Promoter' and the 'Asean Progress'.

Held: (1) in the instant case, as M & G was obviously so undercapitalised that it could not carry on an independent existence and as all the directors of M & G were directors of Haw Par, the court had no hesitation in lifting the veil of incorporation and in holding that on a balance of probabilities M & G were the agents of Haw Par for the carrying on of the latter's business; (2) that would make Haw Par liable 'in personam' on the plaintiffs' claim arising in connection with the ship 'Asean Promoter'. However, the plaintiffs would still have no right to arrest the 'Asean Progress' because this ship was owned beneficially by the defendants and not by Haw Par and there was no evidence on record to suggest otherwise.

The 'Asean Promoter'; Unitrade Ltd v MV 'Asean Promoter', 'Asean Progress', 'Asean Prosperity' & 'Asean Venture' (Owners & Ors Interested) 1989 High Court, Singapore (Abdul Wahab Ghows J).

This application was a corollary to the plaintiff's writ of summons (the suit) which was brought against Dian Tong Credit & Development Sdn Bhd (the first defendant in the suit) and the first defendant (the second defendant in the suit) claiming for a sum of RM303,200 being deposits made by the plaintiff as investments with the deposit-taking business of the first defendant in the suit. The first defendant in this application, the original registered owner of the land now in question, was not a party to that transaction. The plaintiff lodged a caveat against the land. When the caveat had lapsed the land was sold to the second defendant. The plaintiff then lodged a second caveat. The three issues before the court in this application were: (1) the validity of the sale and transfer of the land; (2) the validity of the first caveat; and (3) the validity of the second caveat.

Held: (1) and secondly, the caveator may within a further 21 days, or such extended period after the 21 days period, as may be ordered by the court, serve the Registrar with an order of the court. The intention of the legislature is clear that within three months from the time the notice under s 178 has been served on the caveator, he is obliged to inform the Registrar that an application has been made to the court for an order to the contrary. This is imperative. Having obtained an order of extension from the court he is obliged to serve it on the Registrar within the three months period, or a further 21 days, or such extended period as may be directed by the court. In any event, the caveator is obliged to serve a prior notice within the three months period on the Registrar to prevent the caveat from lapsing. In the instant case, the Registrar's notice was duly served on the plaintiff. Although the plaintiff had in fact obtained a court order for the extension of the caveat pending the trial of the suit, the plaintiff had failed to notify the Registrar of this within the three months. Although the law provides further that within 21 days after the three months period, or such extended period as may be directed by the court, the caveator may serve on the Registrar the order to the contrary from the High Court, it appears that a notice within the three months is a condition precedent before the 21 days period comes into operation. Thus in this case, the right of the caveator was extinguished and the removal of the caveat from the register was correct. Therefore, as the land was free from encumbrances and there was no evidence of fraud that could be attributed to the Registrar, the Registrar had properly executed the transfer and the transfer to the second defendant was in law valid; (2) the plaintiff had brought the action against the first and second defendants in the suit jointly as it was contended that as both the defendants shared the same premises or address, and the same persons were the directors of both companies, they were in fact one and the same company. It is settled law that an incorporated company is a separate legal entity from its members. A shareholder of a company has no interest in the assets of the company. The parent (holding) and subsidiary companies are two separate legal entities and officers of the parent company who are on the Board of Directors of the subsidiary are not representatives of the parent company but sit at the board meeting as directors and agents of the subsidiary. Thus, in this case, the first and second defendants in the suit were separate legal entities, there was no nexus between them. The plaintiff had business connections with the former and not the latter. Therefore, the plaintiff had no interest whatsoever in the land owned by the latter company. The first caveat was thus void and of no legal effect; (3) there are two limbs to s 178 of the Land Code (Sarawak Cap 81). First, the Registrar may serve on a caveator a notice stating that the caveat will lapse after a period of three months from the date of service of the Registrar's notice, 'unless notice is within the said period of three months given to the Registrar that application for an order to the contrary has been made to the High Court';the second caveat was lodged by the plaintiff's counsel in his personal capacity. Counsel was not acting nor purporting to act on behalf of the plaintiff. There was no evidence to show that the plaintiff had instructed him to lodge the second caveat in the land which was then registered in the second defendant's name. As could be clearly seen, the counsel had no business to lodge a caveat in someone's land wherein he had no interest whatsoever. The second caveat was thus bad in law.

Ho Mee Luang v Dian Tong Holding Sdn Bhd & Anor (1996) CSLRI [761] High Court, Sibu (Muhammad Kamil J).

Straits & Island General Insurance Sdn Bhd v Lawrence Chung Hee Mann & Ors Civil Suit No K178 of 1989 High Court, Kota Kinabalu (Syed Ahmad Idid JC).

The Industrial Arbitration Court made an order that the application as secretary and director of a limited company was personally liable for the payment of claims and debts of the company.

Held, inter alia: (1) it is a cardinal principal of company law that except in cases of fraud, breach of warranty of authority and other exceptional circumstances, a director is not liable for the debts of an incorporated company; (2) the Industrial Arbitration Court clearly had no power to make that order and in making it, it acted in excess of or without jurisdiction, ie ultra vires the powers given to it under the Industrial Relations Act.

Re Application by Yee Yut Ee 1978 High Court, Singapore (Choor Singh J).

The plaintiff purchased on behalf of himself and his undisclosed nominees the entire shareholding of a company called Wato from the defendants. Wato at the material time of purchase owned the entire shareholding in a company called Hotel Wato Inn. The written agreement of sale and purchase contained terms obliging the defendants as vendors to indemnify the plaintiff as purchaser and the company against any deletion or diminution in the value of the assets of the company resulting from any claim for payment by the company of tax and payable prior to the date of the agreement under any legislation; and obliging the defendants as vendors to indemnify the plaintiff as purchaser and the company against all actions, costs and demands in respect of debts and liabilities of the company being discovered subsequent to the date of the written sale and purchase agreement. The Inland Revenue Department then issued notices of assessment to Wato and Hotel Wato Inn requiring payment of RM112,951.20 in tax. The plaintiff complied with the tax demand and brought the present action seeking declarative reliefs for indemnification by the defendants of that amount. The defendants denied that the sale and purchase agreement contemplated the defendants to be responsible for the payment of taxes for both companies for the year of assessment at the material time. The defendants further prayed that the solicitor who prepared the written agreement for both parties be called as a witness in the event that the plaintiff wanted to deny the allegations made by the defendants. That solicitor made an affirmation which tended to support the plaintiff's case. The defendants applied to request the attendance of this solicitor for cross-examination, which was granted. At the hearing of the originating summons, the solicitors gave evidence and was subject to cross-examination. Counsel for the defendants then submitted that the oral and affidavit evidence of the solicitor ought to be excluded as it contravened ss 91 and 92 of the Evidence Act 1950.

Held, granting the reliefs sought: (1) the tax liabilities of both Wato and Wato Hotel Inn were contemplated by the parties. This was clearly demonstrated by the solicitor's act of retaining a sum of RM120,900 out of the balance purchase price as tax provisions for both companies in the year of assessment in question; (2) and in more general terms, that the liability of the defendants would incorporate both hidden and exposed liabilities, including the undisclosed debts of Wato and Wato Hotel Inn. Such undisclosed debts would also include the tax liabilities which had been settled by the plaintiff. The word 'company' when used in the written sale and purchase agreement embraced Wato Hotel Inn together with Wato; (3) the contemporaneous or near contemporaneous oral evidence of the solicitor, particularly the background negotiations between the parties preceding the signing of the written agreement, contained matters which were relevant and germane and as such ought to be considered by the court in relation to the self-interested testimonies of the plaintiff and the defendants in their affidavit evidence (First National Bank of Chicago v Tan Lai Wah [1981] 2 MLJ 100 followed); (4) the defendants were estopped from saying that the oral testimony of the solicitor should not be accepted by the court because it was the defendants who sought to cross-examine the solicitor in the first place. When a party to legal proceedings was precluded from alleging or proving that a fact was otherwise than it had been made to appear, an estoppel was said to exist (Canadian & Dominions Sugar Co v Canadian National (West Indies) Steamships [1947] AC 46 followed); (5) the oral testimony of the solicitor was clearly admissible as evidence of surrounding circumstances and factual background leading to a written agreement (Keng Huat Film Co v Makanlall (Properties) [1984] 1 MLJ 243 followed); (6) the words 'income tax due and payable prior to the date of this Agreement' must be construed to mean the income tax incurred prior to the date of agreement and assessed to be due and payable according to the scheme of the Income Tax Act 1967; (7) the indemnity clauses of the written sale and purchase agreement must be construed to mean that it was incumbent upon the defendants to indemnify the plaintiff for income tax due and payable prior to the signing of the written agreement and which was incurred by the plaintiff;the corporate veil of Wato would be pierced to reveal the existence of Wato Inn Hotel as a subsidiary of Wato for the sole objective of achieving justice (Wallersteiner v Moir [1974] 3 All ER 217 followed).

Tay Tian Liang v Hong Say Tee & Ors [1995] 4 MLJ 529; (1995) CSLR I[140] High Court, Johor Bahru (Abdul Malik Ishak J).

D3 obtained judgment against P1 in a separate action. The present action was brought by P1 and its wholly-owned subsidiaries P2, and P3, against various defendants, including D3. Execution of D3's judgment was stayed pending resolution of the counterclaim. D3 obtained an ex parte Mareva injunction prohibiting P1 from dealing with the assets of P2 and P3. P2 and P3 moved to have the injunction dissolved. It was common ground that P1 was controlled by PTS and that PTS was the dominant director in P1, P2 and P3.

Held, dismissing the application: (1) there was incontrovertible evidence that PTS had been involved in bribery and causing falsified entries to be recorded in the books of P1 to conceal the illegal payments. On the evidence, the court was of the view that there was a real risk of the assets of P1 and its subsidiaries being dissipated by PTS; (2) this conclusion did not involve a finding that the group enterprise consisting of P1, P2 and P3 was a sham or that it was set up for a fraudulent purpose or dishonest intent. The finding was that PTS was in a position factually as well as legally to dissipate the assets of the companies; (3) the second requirement for a Mareva injunction is the existence of assets within the control of the party against whom the injunction is sought. In the normal case, assets of a wholly-owned subsidiary are not subject to such an injunction; (4) however, the court satisfied that PTS had full and untrammelled control, in law and in fact, over the assets of the companies. It was necessary to lift the corporate veil to prevent PTS from concealing the assets from creditors. It is not necessary, in order to lift the corporate veil, to find that the defendant is the alter ego of the company. The crucial element is effective control. The interim Mareva injunction, as varied by the agreement of the parties, was continued until the trial of the action.

Pek Seng Co Pte Ltd & Ors v Low Tin Kee & Ors [1989] SLR 890 High Court, Singapore (Chan Sek Keong J).

Hock Hua Bank (Sabah) Bhd ('the plaintiff') took out the present writ on 7 February 1994, against nine defendants claiming against them a sum of RM7,681,000 for fraud and/or conspiracy to defraud the plaintiff. It was alternatively claimed against the second to ninth defendants that they were in receipt of the said sum as a result of a breach of trust and/or fiduciary duty by the defendant Lam Tat Ming ('the first defendant'). The plaintiff alleged that the first defendant, a long-term employee, had assisted the other defendants to defraud the bank between January and December 1993. He allowed incoming cheques for seven defendants to be credited immediately to their bank account, knowing it was against bank procedure, as they had not been marked good for payment, and to have delayed posting debits of the same accounts almost every working day of that period. As a result, the defendants could use various sums of money for the purposes of the seventh defendant company every working day of that period up to eventually RM7.6m without paying interest, without any time set for repayment and without security. The scam was worked out at a meeting in December 1992 between the second and fifth defendants and two senior bank officers. False entries were made in the plaintiff's bank statements to reflect normal banking practice. The second, third, fourth, sixth, eighth and ninth defendants all signed blank cheques for two accounts and gave them to the fifth defendant who ran the seventh defendant company. Each day the second and fifth defendants took cheques to the bank to obtain funds.

Held, allowing the plaintiff's claim: (1) the improper manner in which the cheques were treated was not an 'established banking procedure. The first defendant took part in the scam willingly. The second, third, and fifth defendants knew the money was obtained through improper channels; (2) the standard of proof required to prove fraud in a civil matter was proof beyond reasonable doubt; (3) the first defendant had committed a fraud which caused loss to the plaintiff. The second, third and fifth defendants were also parties to the fraud as they knew the money was obtained by improper means and they had benefited from it; (4) the first defendant was also in breach of trust and fiduciary duty to the plaintiff; (5) there was a conspiracy to defraud between the first, second, third and fifth defendants and the seventh defendant which was controlled by the fifth defendant. However, there was no evidence that the other defendants, although they gave signed blank cheques to the fifth defendant which meant that hundreds of thousands of ringgit were channeled away through their bank accounts, knew details of the loan or the affairs of the seventh defendant; (6) money obtained by this method could not be regarded as temporary overdraft facilities to the defendants; (7) the fact that the plaintiff levied interest on the outstanding amount after the loss was discovered did not amount to ratifying the fraud; (8) although the statement of claim alleged that money was 'received' instead of 'had and received', the defendants could be in no doubt that they were asked to account for the money they had received and which came from the plaintiff. Even if the pleading was defective the evidence of the sums received adduced without objection cured the defect; (9) the first, second, third, fifth and seventh defendants were jointly and severally liable for RM7.6m with costs and interest. The fourth, sixth, eighth and ninth defendants, although not found to have committed fraud or conspiracy to commit fraud, were liable to the plaintiff for money had and received in their accounts as a result of the fraud or conspiracy.

Hock Hua Bank (Sabah) Bhd v Lam Tat Ming & Ors [1995] 4 MLJ 328; (1995) CSLR I[141] High Court, Kota Kinabalu (Ian HC Chin J).

The respondents operated a nightclub in a restaurant. The restaurant was in turn operated by R, a private limited company, of which the appellants were managing director and executive director respectively. R was a wholly-owned subsidiary of another company, H, of which the appellants were also the managing director (D) and executive director. U was the manager of H. The respondents' right to operate the nightclub was based on an agreement in which R permitted the respondents to operate it for a three-year period. At the end of the franchise, R declined to extend the period. The respondents then sued R for specific performance and an injunction to enable them to operated the nightclub as usual, claiming that they had a right to an extension in view of a two-year option given to them by R. The injunction was to restrain R, its servants or agents from disturbing the respondents' use of the premises as a nightclub and from removing any furniture and equipment therein. The injunction was subsequently granted. Meanwhile, U, on the instruction of D, locked the restaurant premises, making it impossible for the respondents to open their nightclub. The appellants were found guilty of contempt of court for contravening the injunction order and were fined. They appealed against their convictions, contending that the closure was not done by R but by H. D argued, inter alia, that he was acting in the capacity of the managing director of H, not R, when he instructed U to lock the premises and that he had no knowledge of the injunction until he was served with it some ten days later.

Held, dismissing the appeal: (1) it is not necessary to go so far as to lift the veil of incorporation. The issue is irrelevant because it is neither R nor H which is proceeded against, but the appellants; (2) there can be no doubt that the appellants knew of the injunction because it was served on their company R on the same day. A company is a fictitious person. It has to operate through some human agency, namely its directors, managers and servants. In this case, the appellants being the managing and executive directors of R must be deemed to have knowledge of the injunction and the manner it was served on R; (3) the fact that both of them are also the directors of H is irrelevant. They should not be allowed to escape responsibility for what they have done by darting in and out within the corporate labyrinth of these two companies at their convenience; (4) U's action was attributable to the appellants because all that U did was to comply with D's instruction. He was in no position to decide in what capacity he carried out that instruction; (5) the liability of the other appellant did not consist of his action but his omission. He knew of the terms of the injunction, yet he conveniently kept quiet and did nothing to stop U from locking the premises. As the executive director of R or even H, surely he had the ample power to keep the restaurant premises open for use by the respondents, but he chose not to interfere with D's instructions. The learned judge was correct in finding him guilty.

Hong Kim Sui v Tan Sai Kiaw (unreported) (1983) Federal Court, Kuala Lumpur (Salleh Abas LP, Lee Hun Hoe, CJ Borneo, and Syed Agil Barakbah FJ).

The respondents were one Looi and a company he controlled, Trade Facilities Pte Ltd (Trade Facilities). Looi owned all but one share in Trade Facilities and was the sole directing mind and will behind Trade Facilities. Looi instructed an agent in Tokyo to look for buyers of Hennessy XO in Japan. The actual negotiation was between the agent in Japan and the buyer there, but Looi gave instructions from Singapore as to such things as the price and terms. The Hennessy XO were delivered in Japan. The buyers suspected that the goods were counterfeit and demanded a refund. The buyers also insisted on sending the goods back to the respondents in Singapore. Looi arranged for a letter of credit to be opened by a third party to finance the refund of the purchase price. Trade Facilities was named as the shipper when the goods were sent to Japan. When they were returned, it was named as the consignee and the party to be notified. Its letterhead was also used in the correspondences with the Japanese agent and the buyer. The goods were seized in Singapore on their return before they had gone through customs. There was some evidence that they were meant to be shipped to China. The goods were found to be adulterated Hennessy XO in genuine Hennessy XO bottles. The boxes they were in were genuine but some of the labels and all of the caps were counterfeit. The respondents were prosecuted by private summons for selling and importing goods to which a trade mark had been falsely applied. At the trial before the magistrate, the respondents argued that the sale took place in Japan and that the Singapore courts had no jurisdiction. It was also alleged that the transaction was a sale by consignment. Furthermore, it was contended that the goods had not been imported into Singapore. The respondents alleged that the goods actually belonged to one Chan Ah Kow and that they had no reason to suspect the genuineness of the goods or the trade marks. They sought to rely on the statutory defences. The magistrate held that the goods had been sold in Singapore and that they had also been imported into Singapore. He held that the respondents were not entitled to rely on the statutory defences and convicted them. The respondents were fined. (See Societe Jas Hennessy & Co v Trade Facilities [1994] AIPR 151.) The respondents appealed against conviction and sentence. The complainant cross-appealed against the sentence.

Held, dismissing the appeal of the respondents and allowing the appeal of the complainant: (1) it did not prohibit the sale itself. The prohibition was aimed against the person and the act of selling, and not the transaction of sale or the agreement to sell. Thus, although the word 'sells' must be given its ordinary English meaning, it was the meaning of the word as a verb that was required. A transactional approach therefore had no application so far as s 73 of the Act is concerned. Since s 73 prohibited the act of selling, where the sale took place and where the agreement to sell was made was not conclusive. In fact, whether a sale or an agreement to sell was reached was also not conclusive; (2) the question whether a person 'sells' must be looked at from the point of view of the seller and not the buyer. In order to determine whether a person had sold goods, the court must look at all the circumstances of the case. The approach was the same where the court had to decide where the act of selling had taken place. In deciding these questions, the acts of the person were relevant, not the resulting transactions, if any; (3) on the facts, adopting the ordinary English meaning of 'sell', there was no doubt that Looi had committed the act of selling the goods in question. Looi had admitted to instructing Higa by fax to look for buyers in Japan. When Higa found the buyer, Looi negotiated for the price through Higa. Whether or not the transaction was a sale by consignment was immaterial. Similarly, there was no doubt that Looi had committed the acts of selling in Singapore. All the acts of selling by Looi were carried out in Singapore. Where the contract was concluded in law and where the property passed was not conclusive. Therefore the Singapore courts had jurisdiction. The fact that Higa was also selling in Japan was not material, for both of them could be selling the same goods at the same time. Similarly, even if Looi was acting for Chan Ah Kow, Looi was nonetheless selling even if he was selling as an agent for somebody else; (4) the word 'import' in s 73 of the Act was as defined in s 2(1) of the Interpretation Act, but with the qualification provided in the Act. If the word 'import' in s 73 had meant simply to bring or to cause to be brought into Singapore, then any person who brought into Singapore a counterfeit branded handbag, wallet, watch or the like would have committed an offence under s 73. He or she would then have the burden of proving on a balance of probabilities the defences provided for in s 73. Parliament could not have intended such an absurd result. Section 73 stated that an offence was committed by a person if he 'imports, sells or exposes or has in his possession for sale or for any purpose of trade or manufacture' the offending articles. The section was directed at persons who dealt, in the course of business in goods to which a counterfeit trade mark was applied or to which a registered trade mark was falsely applied. It was not aimed at the consumer who used or merely possessed these goods. Thus it could not be invoked against the same consumer when he brought the offending article into Singapore merely because he happened to have purchased it abroad. Thus, the words 'for sale or for any purpose of trade or manufacture' applied also to the word 'import' in s 73. A person therefore did not 'import' something into Singapore within the meaning of the word in s 73 of the Act unless it was done for the purpose of sale or for any purpose of trade or manufacture; (5) on the facts, Looi had caused the goods returned by the Japanese buyer to be brought into Singapore. The acceptance of the return of goods sold in the course of trade was something done for the purpose of trade. It was a necessary incident of the trade of selling goods. The returned goods had therefore been imported into Singapore for the purpose of s 73; (6) the evidence showed that Trade Facilities was nothing more than the alter ego of Looi. It was nothing more than a vehicle that Looi employed as and when it suited him. All but one of Trade Facilities's shares were held by Looi and the single directing mind behind Trade Facilities belonged to Looi. This was an appropriate case to lift the corporate veil; (7) the fact that the corporate veil had been lifted did not absolve Trade Facilities of all liability. The acts and intentions of a company's managers could be attributed to that of the company. In this case, Trade Facilities allowed itself to be used as a vehicle of Looi's. Thus, when Looi used Trade Facilities to sell and to import counterfeit Hennessy XO, Trade Facilities was just as liable. Trade Facilities was more than a passive employer. On the facts, Trade Facilities had taken an active part in the acts of selling and importing. Therefore, Trade Facilities was also liable; (8) the s 73(b) defence was not limited to inadvertence or mistake of fact. Nevertheless, in order to prove innocence under s 73(b), it was not sufficient to just show an incomplete s 73(a) defence. However, the mere fact that in order to prove a s 73(b) defence, a defendant had to rely on facts which were also elements of a s 73(a) defence, was not by itself a sufficient ground for saying that the s 73(b) defence could not be relied on. Moreover, the mere fact that a defendant could not establish an element of the s 73(a) defence did not mean that he could not have acted innocently. It was permissible in certain circumstances to point to other additional facts which could turn an incomplete s 73(a) defence into a s 73(b) defence; (9) the respondents could not rely on the s 73(a) defence in respect of either of the charges of selling or importing because they had not given all information in their power with respect to the person from whom they got the Hennessy XO to the complainant, despite repeated demands by it. It was not sufficient in the case of goods returned by buyers to just provide the complainant with information about the buyer who rejected the goods. The seller accepting the return of the goods must provide information about the person he got the goods from in the first place; (10) as for the s 73(b) defence, the mere fact that Looi was acting as an agent was not something that could be used to show innocence when Looi had consciously refused to provide information about his principal to the complainant. The fact that one was a mere agent was not something that could be used to establish innocence when the agent had failed to give all the information in his power with respect to the principal to the complainant when so demanded. Apart from the allegation that Looi was an agent of Chan, there was no additional fact which could establish innocence. That being the case, the respondents' s 73(b) defence was nothing but an incomplete s 73(a) defence. The respondents had therefore not satisfied the court that they have acted innocently; (11) where a seller sold goods to an overseas buyer which was discovered to be counterfeit, and the seller was able to establish a defence to the original act of selling, he could normally be said to act innocently when he imported the same goods back to Singapore because the foreign buyer had rejected the goods. The fact that when he imported those goods he now had reason to suspect the genuineness of the trade mark was not sufficient by itself to defeat the defence of innocence; (12) on the facts of this case, the primary reason why the respondents could not establish a defence to the charges of selling the goods was that they had refused to provide all information in their power about the source of the counterfeit goods. This refusal sufficiently tainted the subsequent import so that, in relation to the import, when the respondents persisted in failing to provide the information asked for by the complainant, they could not avail themselves of the defence of innocence. In the absence of some special circumstance, this was so even if, at the time of the original act of selling, the seller had taken all reasonable precautions and had no reason to suspect the genuineness of the mark. There was no such special circumstance here. In this case, this failure was fatal to the s 73(b) defence with relation to the charge of importing; (13) taking into account the seriousness of the case and the manner in which the respondents have conducted the defence, a custodial sentence should be imposed on Looi. Therefore, in addition to the fines already imposed, Looi was sentenced to three months' imprisonment for the offences of selling and importing the goods respectively. The sentences were to run concurrently; (14) s 73 provided that any person who 'sells' committed an offence;(per curiam) although the element of providing information about the person from whom the defendant obtained the goods, when requested for by the complainant, was not an indispensable element of the s 73(b) defence, it was nonetheless often of great importance. Only exceptional facts could displace this element of innocence, even in respect of the s 73(b) defence.

Trade Facilities Pte Ltd & Ors v Public Prosecutor [1995] 2 SLR 475; (1995) CSLR I[139] High Court, Singapore (Yong Pung How CJ).

The plaintiffs/applicants operated a nightclub and restaurant in licensed premises in Hotel Shangrila which was owned by Hotel Berjaya Sdn Bhd. The restaurant itself was owned by Red Rose Restaurant Sdn Bhd, a subsidiary of Hotel Berjaya Sdn Bhd. The plaintiffs obtained an interim injunction to restrain the defendants from disturbing the plaintiffs' quiet use and enjoyment of the premises. On the nights of 14 and 15 March the plaintiffs were able to carry on their business at the premises but on the following night, 16 March, the premises were locked. The plaintiffs instituted proceedings against the first and second respondents (who were directors of Red Rose Restaurant Sdn Bhd) for civil contempt of court in breaching the order of 14 March 1983. The respondents contended that the closure of the premises was effected by a separate entity, Hotel Berjaya Sdn Bhd, the owner of Hotel Shangrila. The defendant company and the respondents should not, therefore, be held responsible for such acts.

Held: (1) and (iv) proof of mens rea was not necessary; (2) on the facts, all the necessary ingredients had been established. The plea that a separate entity, Hotel Berjaya Sdn Bhd, was instrumental in breaching the order was not accepted as there was functional integrity between the hotel and restaurant. Hotel Berjaya and Red Rose were one single entity; (3) the following were the ingredients to found a case of civil contempt of court: (i) the terms of the injunction must be clear and unambiguous; (ii) the respondents must have proper notice of such terms; (iii) there must be clear proof that the terms have been broken and breach must be proved beyond all reasonable doubts;the respondents should be found guilty of contempt of court and fined accordingly.

Tiu Shi Kian & Anor v Red Rose Restaurant Sdn Bhd [1984] 2 MLJ 313 High Court, Kota Kinabalu (Wan Mohamed J).

In this case a number of workers employed by the Jaya Puri Chinese Garden Restaurant Sdn Bhd were retrenched by the company as the business was closed owing to losses. The restaurant was carried on in premises belonging to the Hotel Jaya Puri Berhad and both the hotel and the restaurant had the same managing director. A dispute arose between the National Union of Hotel, Bar and Restaurant Workers representing the workers and the restaurant and the dispute was referred to the Industrial Court. The union sought to have the hotel joined as a party alleging that the workers were the employees of the hotel and that they were dismissed and not retrenched as alleged by the restaurant. The Industrial Court in its award found that (1) the workers were employees of the hotel and not of the restaurant; (2) the closure of the business of the restaurant was proper and genuine; and (3) the termination of service of the employees was a discharge of workers following the closure of business and not retrenchment as understood and accepted in industry. The court also awarded two months' basic salary and fixed allowances as compensation. The hotel applied to the High Court to quash the award on the grounds (a) the award against the hotel was an error in law as under s 29 of the Industrial Relations Act 1967 (Act 177) and the Industrial Relation Rules no claim and no award can be made against the party added, although it may make a claim; (b) the hotel was not the employer of the workers in question; and (c) the termination of the workers was retrenchment and no compensation was payable as none of them had completed three years' minimum service.

Held: (1) the Industrial Court has a discretion to add a party as an additional claimant or an additional respondent and if the party is added as a respondent, it can be made subject to the award. In any case the matter is purely procedural and does not affect the jurisdiction of the Industrial Court at all; (2) the finding of the learned President of the Industrial Court that the hotel and the restaurant were in reality one enterprise was in no way against the principle of separate entity but rather gave effect to the reality of the hotel and restaurant as being one enterprise; (3) the termination of the service of the workers was proper and there was no legal basis for the award of compensation to the workers. There was an error on the face of the record and the award should be quashed.

Hotel Jaya Puri Bhd v National Union of Hotel, Bar and Restaurant Workers & Anor [1980] 1 MLJ 109 High Court, Kuala Lumpur (Salleh Abas FJ).

The plaintiffs were foreign companies carrying on business in London and New York. The two defendants were companies incorporated in Malaysia and carrying on business in Malaysia. The plaintiffs claimed that the defendants were substantially indebted to them. The first defendant company wrote a letter to the first plaintiff admitting the debt and asking the latter not to commence legal proceedings against it for a period of 21 days. The letter further stated that within the said period of 21 days, the first defendant would pledge in favour of the plaintiffs all the issued shared capital of its subsidiary company, namely, the second defendant. In addition the first defendant would procure the creation of a first legal fixed and floating charge over all the assets of the second defendant in favour of the plaintiffs as security for the payment of the said debt. The defendants failed to comply with their undertaking. The plaintiffs commenced an action in London against the first defendant and its associate companies and obtained a Mareva order restraining them from dissipating their assets up to a maximum limit of £3,700,000. On 11 January 1986, the plaintiffs filed a writ here against the defendants and obtained an injunction restraining the first defendant from disposing of or creating any charges, liens, pledge or any other encumbrances over the issued and paid-up capital of the second defendant. It also restrained the second defendant disposing of or creating any charges, liens, pledge or any other encumbrances over all the assets of the second defendant both movable and immovable. The two defendants applied for an order of court dissolving the injunction granted against them.

Held, allowing the application: (1) the present proceedings before this court were an abuse of the process of the court and should be stayed, and the injunction ordered against the first defendant be dissolved; (2) the plaintiffs' undertaking as to damages could not be enforced as they had no assets within the jurisdiction. All the plaintiffs were foreign companies resident abroad. If the plaintiffs did not succeed at the trial, the first defendant would suffer damages which the plaintiffs could not compensate. The balance of convenience should be decided in favour of the first defendant; (3) the court will only lift the corporate veil of a company if the justice of the case so demands. In the instant case there was no justification for the court to lift the corporate veil of the second defendant; (4) since the second defendant was a separate entity from the first defendant, the undertaking given by the first defendant did not bind the second defendant. The plaintiffs had, therefore, no cause of action against the second defendant. The injunction granted against the second defendant must be dissolved.

JH Rayner (Mincing Lane) Ltd & Ors v Manilal & Sons (M) Sdn Bhd & Anor [1987] 1 MLJ 312 High Court, Kuala Lumpur (Zakaria Yatim J).

The National Union of Hotel, Bar and Restaurant Workers (the union) made a proposal to Hotel Malaya Sendirian Berhad (the hotel company) for a new collective agreement and suggested that there should be a single collective agreement between the union on the one hand and the hotel company and the Kuala Lumpur Restaurant Sendirian Berhad (the restaurant company) on the other. Therefore, the union invited the hotel company to enter into negotiation for a single collective agreement on that basis. The hotel company denied that it was the employer of the workers in the restaurant of the restaurant company, and it did not agree to a single collective agreement and refused to negotiate unless the union agreed to separate negotiations on the basis of separate collective agreements, one in respect of the hotel company and another in respect of the restaurant company. The workers of the hotel company went on strike on 1 August 1979. Upon the commencement of the strike, the hotel company referred the matter to the Minister of Labour and Manpower forthwith. On 9 August 1979, the hotel company wrote to its workers on strike terminating their services as from that date on the ground of illegal strike. On 18 August 1979, the minister through Ketua Setiausaha of his Ministry, referred the dispute to the Industrial Court under s 26(2) of the Industrial Relations Act 1967 (Act 177) (the Act). After hearing the parties, the Industrial Court made an award in favour of the hotel company. Subsequently, on the application of the union the Industrial Court referred certain questions of law to the High Court under s 33A of the Act.

Held: (1) the Industrial Court should have considered and decided on the question whether the hotel company was the employer of the workers in the restaurant of the restaurant company because the question was relevant. In the present case, the hotel company was not the employer; (2) the Industrial Court had erred in law and made a jurisdictional error in failing to consider and decide on the question whether there should be a single collective agreement. The decision should be that there should be separate collective agreements and hence separate negotiations.

National Union of Hotel, Bar and Restaurant Workers v Hotel Malaya Sdn Bhd [1987] 2 MLJ 350 High Court, Kuala Lumpur (Wan Hamzah SCJ).

Tan Guan Eng & Anor v Ng Kweng Hee & Ors [1992] 1 MLJ 487 High Court, Penang (Edgar Joseph Jr J).

Sunrise Sdn Bhd v First Profile (M) Sdn Bhd & Anor [1996] 3 MLJ 533; (1996) CSLR I[142] Federal Court, Kuala Lumpur (Chong Siew Fai CJ (Sabah & Sarawak).

Lim Kar Bee v Duofortis Properties (M) Sdn Bhd [1992] 2 MLJ 281 Supreme Court, Malaysia (Harun Hashim, Mohamed Azmi and Peh Swee Chin SCJJ).

The respondents brought an action against Lorrain Osman, who was a director of the first respondent and the chairman of the second respondent, for the total sum of $27,625,853.06 which they claimed to be secret profits made by Lorrain without their knowledge and approval. The respondents also made an ex parte application for a Mareva injunction to restrain Lorrain from transferring his assets out of jurisdiction and also for an order of discovery for Lorrain to disclose the value, nature and whereabouts of all his assets. The orders which were made on 10 January 1985 could not be served on Lorrain and the learned trial judge, on the application of the respondents, extended the Mareva injunction to Lorrain's assets in 32 other banks in addition to the six banks cited in the earlier order and also to his shares in 104 other companies apart from Aspatra Sdn Bhd and the four companies mentioned in the original order, for the purposes of restraining Lorrain from dissipating his assets up to the amount claimed in the writ. The court also granted an Anton Piller order against Aspatra Sdn Bhd which was subsequently varied and extended to other companies. Aspatra Sdn Bhd and the other companies affected were allowed to be joined as interveners in the Mareva proceedings to enable them to set aside the ex parte injunction and Anton Piller orders against them. The applications to set aside the ex parte orders were filed and heard in batches and eventually there were still 77 companies affected by the Mareva injunction which had not intervened. Of these 12 had been discharged from the said orders on the application of the respondents. The injunction in respect of the remaining 65 companies remained in force, but as in the case of the 27 companies which had intervened, the terms of the injunctions were varied to enable the companies to carry on with their day to day business. The appellants appealed against such part of the order of the learned trial judge which dismissed (1) the interveners' application for dissolution of the Mareva injunction and (2) Aspatra's application for dissolution of the Anton Piller order made against them.

Held, (by a majority, Seah SCJ dissenting): (1) the court could generally lift the corporate veil in order to do justice particularly where an element of fraud is involved. There was admittedly an element of fraud in the receipt of the secret profits alleged in this case and this was sufficient for the court to lift the corporate veil for the purpose of determining whether the assets of the company were really owned by them; (2) in this case the corporate veil having been properly lifted and Lorrain having been exposed as the alter ego of Aspatra, it became necessary to identify all assets within jurisdiction owned by Lorrain. The Anton Piller order granted by the learned judge in aid of the Mareva injunction was necessary as it was an aid to justice as far as the respondents were concerned; (3) this was an appropriate case to grant the Mareva injunction together with the Anton Piller order, after the corporate veil had been lifted.

Aspatra Sdn Bhd & Ors v Bank Bumiputra Malaysia Bhd & Anor [1988] 1 MLJ 97 Supreme Court, Kuala Lumpur (Salleh Abas LP, Seah and Mohamed Azmi SCJJ).

[Annotation: Bank Bumiputra Malaysia Bhd v Lorrain Osman [1985] 2 MLJ 236 affirmed. For related proceedings, see [1987] 2 MLJ 633, [1987] 1 MLJ 502.]

The plaintiffs were time charterers of the Skaw Princess, registered owners of which were Corsair Holdings Inc ('Corsair'). The plaintiffs had a claim against Corsair for approximately US$240,000 on account of bunkers, overpaid hire, owners' disbursements, and other charges and commissions. They commenced proceedings in Curacao and arrested the Skaw Princess, the owners of which were described as Corsair. However, the plaintiffs were unsuccessful in recovering any part of their claim as the mortgagees' claims exceeded the value of the vessel. The plaintiffs thereafter commenced proceedings in Singapore and arrested the Skaw Prince. The registered owners of the Skaw Prince were Filey International Inc ('Filey'). Both Corsair and Filey were 100% owned by Pontina. Pontina in turn was 100% owned by Skaw Shipping. In arresting the Skaw Prince, the plaintiffs claimed that Skaw Shipping were liable to them in personam and that they were the owners of the Skaw Princess and Skaw Prince at the relevant times. The defendants applied to set aside the arrest and for damages for wrongful arrest. The plaintiffs argued that Skaw Shipping was the proper party liable in personam as it was the beneficial owner of both Skaw Princess and the Skaw Prince and Corsair and Filey were not the beneficial owners. The registrar set aside the arrest but did not award damages. Both parties appealed and cross-appealed to the High Court. The plaintiffs relied, inter alia, on the following facts in support of its submissions: the Skaw Princess was used to secure Skaw Shipping's indebtedness; the managing director of Skaw Shipping was a Karlsen who was involved in every level of control in Corsair, Filey, Pontina, Skaw Shipping and Wind Marine, the managers for Skaw Princess; and the common name 'Skaw'.

Held, affirming the registrar's decision and dismissing both appeals: (1) when arresting a ship, the plaintiffs had to satisfy both the in personam test and the in rem test. For the in personam test they had to show a good arguable case. In satisfying the in rem test, they had to show that the ship in the in rem action at the time the proceedings were commenced was beneficially owned by the in personam defendant in respect of all shares in it; (2) beneficial ownership meant such ownership of a ship as is vested in a person who has the right to sell, dispose of or alienate all the shares in that ship. The court has a duty to look behind the register to determine who in fact is the beneficial owner; (3) some of the principles that can be applied in determining the beneficial ownership are the principles of equity and trust, avoiding fraudulent conveyances and piercing the corporate veil, transfer of title to goods and estoppel; (4) it is well known that businesses engaged in shipping set up and utilize one-ship companies for the purposes of limiting liabilities. The devise has been recognized by the courts as a legitimate one. The courts will not lift the corporate veil unless the circumstances are exceptional; (5) the plaintiffs' submission that they regarded Skaw Shipping to be the effective contracting party and Corsair as its nominee was not borne out by the conduct of the plaintiffs, amongst other things, in pursuing their claim in Curacao against Corsair when they arrested the Skaw Princess; (6) the corporate structure of the Skaw Group was already firmly in place before the plaintiffs' claim arose and the creation of Corsair and Filey as wholly-owned subsidiaries within the group was entirely legitimate. The Skaw Group was well entitled to make operational and management decisions in respect of the aforesaid one-ship companies Corsair and Filey and the ships could legitimately be utilized for the benefit of the group; (7) the corporate veil should only be lifted if the ships the subject of the claim have since been transferred to a new ownership with a view to ascertaining whether the beneficial owners remained the same or where a facade or situation is shown, where deliberate fraud has been perpetrated through fictitious transactions or through the vehicle of non-existent companies. None of these situations existed here.

The 'Skaw Prince'; ST Shipping and Transport Inc v Owners of and Other Persons Interested in the Ship or Vessel 'Skaw Prince' [1994] 3 SLR 379; CSLR I[137] High Court, Singapore (Amarjeet JC).

The defendant company applied to set aside an injunction restraining the company from selling, charging or leasing two lots of land, one lot being registered in the name of the company and the other in the name of an individual as trustee. The plaintiffs based their application for the injunction on sale and purchase agreements alleged to have been entered into between the defendant company and the plaintiffs or the original purchasers who assigned their rights to the plaintiffs. However, all the agreements (except for one) were entered into with a firm and not the defendant company.

Held, setting aside the injunction: (1) the statement of claim and the affidavit of the first plaintiff were misleading and did not disclose that the sale and purchase agreements (except for the one entered into by the seventh plaintiff) were entered into with a firm, not the defendant company. All the facts must be laid before the court, otherwise the injunction may be set aside without regard to the merits. Therefore, the misleading averments were enough to justify the discharge of the injunction; (2) the plaintiffs stated that the persons who executed the sale and purchase agreements were the 'founding subscribers' of the defendant company. However, there was no evidence that the subscribers were promoters of the defendant company. In fact, there was nothing in the agreements to say that the contracts were entered into by the defendant company, or by any person on behalf of the defendant company, before its incorporation; (3) the corporate veil could not be lifted as the founding subscribers of the defendant, who signed on behalf of the defendant, no longer appeared to control the defendant company; (4) the seventh plaintiff was not entitled to specific performance as the contract was a conditional contract and 16 years had passed since the purchase of the said land.

Lim Sung Huak & Ors v Sykt Pemaju Tanah Tikam Batu Sdn Bhd [1993] 3 MLJ 527 High Court, Alor Setar (KC Vohrah J).

P were owners of the cargo laden on board the ship S1, which sank. P commenced an action in rem against the owners of the ship EV, who it was alleged were at all material times the owners of the S1. S1 was actually owned by SSC while EV was owned by AS, both of which were Panamanian companies. Despite this, P's contention was that since the shareholders, directors and executive officers of SSC and AS were the same, the court should 'lift the veil' of incorporation and treat the two companies as if they were the same. It was accordingly submitted that the EV was beneficially owned by the owners of the SS for the purpose of a sister ship action under s 21 of the Supreme Court Act 1981. P had the EV arrested. The owners applied to have her released. The High Court refused the application. The owners appealed.

Held, allowing the appeal: SSC was the person who would be liable to P on an action in personam. The question was whether SSC could be said to be the beneficial owner of EV, the putative sister-ship. This depended on proving that the two companies SSC and AS were shams and merely a cover for the true owners. The court was unwilling to do this. Section 21 does not justify the arrest of a ship owned by another company even if the shareholders/controllers are the same. The appeal was therefore allowed and the EV ordered to be released.

The Evpo Agnic [1988] 3 All ER 810 Court of Appeal, England (Lord Donaldson MR, Butler-Sloss LJ and Sir Roualeyn Cummings-Bruce).

[Annotation: Section 21(4) of the Supreme Court Act 1981 is almost identical to s 4(4) of the High Court (Admiralty Jurisdiction) Act (Cap 123) [Sing]. In Malaysia, see generally s 24(b) of the Courts of Judicature Act 1964.]

P did repairs on the Engineer 103. They arrested the Interippu in connection with the claim. Engineer 103 was owned by CMPL. Interippu was owned by CSEP. Both companies shared the same registered address. CSEP held all but two shares in CMPL. The shares of CSEP were held equally by W and his wife T. W and T each held one share in CMPL. The repairs were commissioned by W. The invoice for the repairs was addressed to CMPL. CSEP applied to have the writ and warrant of arrest set aside.

Held, allowing the application: (1) on the evidence, when P contracted to repair the Engineer 103, they intended to contract with the owner of the vessel. The person liable in personam was therefore CMPL and not CSEP; (2) this was not an appropriate case to lift the veil of incorporation. No fraud was alleged nor were the companies shams, even though both companies were controlled by W. They were properly capitalized; (3) CMPL had not disputed the liability to pay, but merely quantum. They were prepared to give a bank guarantee for the invoiced amount and fight the case in court. It was not necessary to lift the veil of incorporation in order to do justice. The writ and warrant of arrest were accordingly set aside.

The 'Interippu'; Uni-France Offshore Engineering Pte Ltd v Owners of the Ship or Vessel 'Interippu' (1989) CSLR I[133] High Court, Singapore (Chao Hick Tin JC).

The plaintiffs in this case filed a writ of summons on 27 November 1978 for the sum of $258,128.01 in respect of disbursements made by them as agents of the defendants. On the same day the plaintiffs applied for a warrant of arrest of the ship 'Loon Sheng' which was lying in the Port of Penang. The plaintiffs claimed that the defendants were at the time when the cause of action arose, the owners of the said ship and were also at the date of the issue of the writ in this action the beneficial owners of the ship in respect of all the shares therein. The defendants sought to set aside the writ for want of jurisdiction in rem under s 3(4) of the Administration of Justice Act 1956 of England. The said Act was applicable in Malaysia by virtue of s 24(b) of the Courts of Judicature Act 1964.

Held: (1) the court could pierce the corporate veil and look behind the registered owner to determine the true beneficial ownership of the ship; (2) the expression 'beneficially owned as respects all the shares therein' indicates title, legal or equitable, and cannot by any means cover cases of possession and control, however full and complete without ownership; (3) for the ship to be liable to arrest it must be the ship in connection with which the claim made in the action arose, if at the time when the action was brought it was the property of the defendant to the action, the defendant being the person who would be liable on the claim in an action in personam and who was either the owner or charterer of or in possession or control of the ship at the time when the cause of action arose; (4) the plaintiffs were not entitled to invoke the admiralty jurisdiction of the High Court against the ship which was not beneficially owned at the date of the issue of the writ by Lord Steamship Co SA who were liable in personam on this claim; (5) in the absence of proof of mala fides or malicious negligence, the court would not give damages against the parties arresting the ship.

The 'Loon Sheng'; Eng Hong Trading Co Sdn Bhd v The 'Loon Sheng' Owners & Ors [1979] 2 MLJ 179 High Court, Penang (Gunn Chit Tuan J).

NKM Trading Sdn Bhd v Bank Buruh (M) Bhd (1990) CSLR I[129] High Court, Kuala Lumpur (Zakaria Yatim J).

The appellant had claimed commission against the respondents under an agreement by which the respondents agreed to pay the appellant commission, entertainment and service fees if the appellant was successful in getting a Korean concern, Shin Fung (Borneo) Co, to enter into a contract to extract and purchase timber from a concession area. The respondent firm had become defunct and the partners of the firm incorporated a limited company, the Lian Fatt Sawmill Co Ltd, to work in the concession area. Forest licences which had been issued to the firm were renewed in the name of the company. The company entered into the agreement with the Korean concern for the extraction and sale of timber in the concession area. The appellant claimed commission under the agreement with the firm. His claim was dismissed in the High Court and he appealed to the Federal Court.

Held, allowing the appeal: (1) once the appellant had brought the parties together he was entitled to his commission and it did not matter that in fact the Korean concern made the contract with the limited company and not the firm as the persons in control of the partnership and the limited company were the same; (2) the respondents were taking advantage of a device to try to evade payment of commission. Such a device should not be allowed to defeat the claim of an innocent party. Under the circumstances, it would be inequitable for the partnership to refuse to pay the commission.

Tang Chiok Sing v Lian Fatt Sawmill Co [1976] 2 MLJ 241 Federal Court, Kuching (Suffian LP, Lee Hun Hoe CJ (Borneo).

Lai Ah Kau & Anor v Public Prosecutor [1988] SLR 735 High Court, Singapore (Chua J).

Where the law provides a particular method or form of procedure for effecting service, or a particular place at which, or to which, service may be effected, then there must be strict compliance with those provisions, and the court would set aside a judgment obtained by default where the requirements have not been complied with. In this case as the company had not been served with the writ of summons at its registered office, the purported service was therefore bad and all proceedings thereafter were bad and the judgment obtained in default of appearance was accordingly a nullity.

PT Pelajaran Nasional Indonesia v Joo Seang & Co Ltd [1958] MLJ 113 High Court, Penang (Rigby J).

P served a statutory demand for payment of a debt on D at its registered office. They were told that D was no longer there. Nevertheless, the statutory demand was left at that address, which appeared in the records of the Registry of Companies as the registered office of D. Notice of change of registered office was filed by D four days after service of the statutory demand. When D failed to comply with the demand for payment P petitioned for their liquidation on the ground of D's inability to pay its debts, relying on the statutory presumption of insolvency arising from non-compliance with the demand. At the hearing of the petition it was objected that the statutory demand had not been properly served.

Held, granting the petition: (1) if a company changes its registered office without filing formal notice to that effect, service at the registered office is valid; (2) in the instant case the notice of change of registered office had not been filed until after the service of the statutory demand. Until the notice of change was lodged, the registered office remained unchanged for the purposes of the Act even though the company might in fact have moved to another address; (3) accordingly, the statutory demand had been validly served and the court made the order for winding-up.

Re Shangri-La Cruise Pte Ltd [1990] SLR 799 High Court, Singapore (Yong Pung How J).

Summit Co (M) Sdn Bhd v Nokko Products (M) Sdn Bhd [1985] 1 MLJ 68 Federal Court, Kuala Lumpur (Salleh Abas LP, Wan Suleiman and Seah FJJ).

In an application by the defendant company to set aside the judgment against it in default of appearance, the question arose for determination whether the service of the writ upon the defendant was good service. A copy of the writ pertaining to this action was served on the defendant by leaving a copy of the writ at the registered office of the defendant in accordance with the Rules of the Supreme Court 1957, O 9 r 8(1)(a). Actually previous to the date of such service the defendant had completely vacated and removed to another address and carried on its business at its new address. A notice of the change of address was posted on the main door of the old office notifying the defendant's new address. Under s 120(1) of the Companies Act 1965 (Act 125), the defendant was required to notify the Registrar of Companies of the change of address within a period of one month but the service of the writ in this case took place within this period of one month.

Held: as the service effected in this case did not give any notice at all to the defendant the purported service was, therefore, not a good service and the judgment in default of appearance and all subsequent proceedings against the defendant must be set aside with liberty on the part of the plaintiffs to reserve the writ on the defendants.

Kwong Kum Sun Chan Glass Merchant v Ahong Construction Co (Malaya) Ltd [1968] 1 MLJ 29 High Court, Kuala Lumpur (Pawan Ahmad J).

In this case, the writ of service on the defendant Sakota Ltd SA was served on 18 October 1972, by leaving a copy of the writ at the registered office of Kie Hock Shipping Co Ltd. On 24 October 1972, the defendant company entered conditional appearance and on 3 November 1972, took out a summons-in-chambers to set aside the service of the writ on the ground that Kie Hock Shipping Co Ltd whose address is given in the citation of the said writ of summons as the Singapore address of the defendant, a Panamanian company, were not, when the said writ of summons was issued nor when the writ was purportedly served at the said address, the agents of or in any other business relationship with the defendant company. The registrar ordered the writ set aside. On appeal the appellants contended that the writ had been validly served. It was submitted that the defendant company had a residence or was carrying on business in Singapore and their agents at the time of service of the writ was Kie Hock Shipping Co Ltd.

Held: (1) there was no evidence that Kie Hock Shipping Co Ltd carried on business or acted in any way as agents or managers of the defendant company after 1 January 1971; (2) on the evidence, the defendant company was not at the date of service of the writ resident or carrying on business in Singapore.

Korea Metals Export Corp & Anor v Sakota Ltd SA 1972 High Court, Singapore (Wee Chong Jin CJ).

In this case, the appellants were a foreign corporation with a registered office in Germany and without a local office. They entered into a contract with the respondents for the supply of machinery and the contract stated that a Swiss firm, with a local office, acted as agents for the appellants. The writ in this case was served on the manager of the Swiss firm. Service was accepted and conditional appearance was entered for the appellants by Messrs Skrine & Co. Subsequently Messrs Skrine & Co obtained an order for discharge but this was not served or filed. Some considerable time later, Messrs Zain & Co entered a memorandum of conditional appearance for the appellants without prejudice to an application to set aside the writ and service of the writ. The application to set aside was dismissed by the learned judge who held that it was not made within a reasonable time. The appellants appealed.

Held: the Swiss company was clearly an agent of the foreign company and by virtue of O 9 r 8A of the Rules of the Supreme Court 1957, the service was a good and proper service.

Getz Brothers & Co GMBH v Pan-Malaysian Wood Products Sdn Bhd [1980] 2 MLJ 79 Federal Court, Ipoh (Raja Azlan Shah CJ (Malaya).

Both the appellants in this case are limited liability companies registered outside the jurisdiction of the court - Messrs Heinemann being registered in the United Kingdom and Messrs Moore in Singapore. Messrs Moore have, however, established a place of business within the jurisdiction and delivered to the Registrar of Companies the name and address of a person in Kuala Lumpur authorized to accept service of process on their behalf in accordance with s 301(1)(c) of the Companies Ordinance. The respondent issued a writ and served it on Messrs Moore's local agent for Messrs Heinemann and Messrs Moore. Both the appellants, having entered conditional appearances, took out a summons-in-chambers for an order that the writ be set aside or alternatively that the service of the writ be set aside on the grounds that although Messrs Heinemann were outside jurisdiction, leave to issue and serve the writ was not obtained under O 2 r 4 of the Rules of the Supreme Court 1957 and alternatively that Messrs Moore could not be served as agents of Messrs Heinemann. This summons was supported by an affidavit filed by the managing director of Messrs Moore and the respondent filed an affidavit in reply. The affidavit of the managing director, Mr Donald Moore, stated that his company had no control or management of any business or work for Messrs Heinemann. On the other hand the respondent in his affidavit stated that in effect Messrs Moore were the official agents of Messrs Heinemann trading within the Federation. However, the respondent did not indicate the source of his belief as to the relations between the appellants. He merely exhibited to his affidavit certain trade catalogues issued by the appellants. Neal J dismissed the application but gave leave to appeal. It was argued for Messrs Heinemann that they could not be served within jurisdiction because they had no place of business within jurisdiction and Messrs Moore could not be served within jurisdiction as their agents under O 9 r 8A because the action did not relate to any business or work at all or at any rate to any business or work of theirs within the Federation under the control or management of Messrs Moore. The service on Messrs Moore was therefore so far as Messrs Heinemann were concerned a nullity. For Messrs Moore it was argued that although the service on their local agent might be good service, the issue of the writ was a nullity by reason of Messrs Heinemann's residence outside jurisdiction and the respondent's failure to obtain the necessary leave to issue. Counsel for Messrs Heinemann also applied for leave to put in evidence a number of further affidavits. He contended that by reason of O 58 r 4(2) such further evidence might be given without leave because it related to an interlocutory application but if leave was necessary by reason of O 58 r 4(3) then it should be granted.

Held: (1) this was not a case of an interlocutory application but an appeal from an interlocutory order of the court below, and hence leave was necessary in order to put in the further affidavits as evidence. Such leave could not be granted in this case because the affidavits contained nothing which was not well-known to the appellant from the very beginning of the litigation; (2) in order to bring a case within O 9 r 8A the relationship between a defendant and the person having management or control of his work or business as manager or agent should, at the very least, be such that the manager or agent is under some obligation to bring service of a writ to the notice of his employer or principal. On the evidence before the court (as contained in the two affidavits) the learned trial judge was not justified in holding that Messrs Moore were the agents of Messrs Heinemann and in rejecting Messrs Moore's affidavit that his company had no control or management of any business or work for Messrs Heinemann in the Federation. The purported service of the writ on Messrs Heinemann should therefore be set aside as it did not fall within the provisions of O 9 r 8A; (3) as far as Messrs Moore were concerned the writ against them was properly served. There was no authority for saying that because Messrs Heinemann were out of jurisdiction and could not be served within jurisdiction the writ as against Messrs Moore was a nullity. Appeal allowed in part.

William Heinemann Ltd & Donald Moore Ltd v GN Christie [1960] MLJ 99 Court of Appeal, Kuala Lumpur (Thomson CJ, Hill and Good JJA).

A generally endorsed writ may validly be served on the chairman of a foreign company while on a temporary visit to Singapore although the company had neither an office nor an agent in Singapore if it can be shown that at the time of service the chairman had authority to do business for the company in Singapore.

Atmaram & Sons v Essa Industries Ltd 1965 High Court, Singapore (Chua J).

The plaintiff issued a writ in respect of his claim for damages for wrongful dismissal against the defendant company, which was incorporated outside Singapore but carried on business in Singapore. Under the provisions of s 301(1)(c) of the Companies Ordinance, the name and address of one Philip Lau was delivered to the Registrar of Companies for registration as a person resident in Singapore authorized to accept service of process on behalf of the company. The writ was taken out in the name of the company. The solicitors for the company undertook to accept service on behalf of the company and service was effected on the company's solicitors. Subsequently, the company's solicitors entered conditional appearance and made an application to set aside the writ on the ground that it was addressed to the company and not to Philip Lau and alternatively that the service was irregular because the writ had not been correctly addressed.

Held: (1) s 305 of the Companies Ordinance (Cap 174, 1955 Ed) relates to the question of the sufficiency of service and does not impose any requirement as to the wording of the writ itself and therefore the writ in this case was correctly addressed; (2) the object of s 305 is to provide a method of service on a company incorporated abroad which carries on business locally. It is not the only method of service and is an alternative to any other method provided in the rules; (3) as the solicitors for the company had undertaken to accept service, the writ would not be set aside.

Goh Siew Wah v Columbia Films of Malaysia Ltd 1965 High Court, Singapore (Winslow J).

This application arose from the plaintiffs' action against the defendants for recovery of vacant possession of premises No 39, Chulia Street, Penang. The writ of summons was served by the plaintiffs on the defendants on 24 August 1983 by prepaid registered post addressed to the defendants at No 103, Bangunan Malayan Banking, First Floor, Jalan Union, Penang and at premises No 39, Chulia Street, Penang which the plaintiffs had claimed to be the registered and business offices respectively of the defendants. The AR Registered retour cards were endorsed and acknowledged by the defendants on 29 August 1983. The defendants applied to strike out the plaintiffs' action on the ground that the writ of summons was never served on them at the registered office. They maintained that at all material times the registered address for service (being the registered office) of the defendants under the Companies Act 1965 (Cap 125) was at No 31 China Street Ghaut, Penang.

Held, dismissing the defendants' application: (1) it was not the legislative intention to limit service only at the registered office. The rule (O 62 r 4(1)(b)) says if there be more offices than one, then service may be effected at the principal office which should mean the principal place of business of the corporation; (2) on the facts of this case, the principal place of business of the defendants at the material time was No 39, Chulia Street, Penang and the service of the writ by AR Registered post was good and effective service. The defendants in this case had become aware of the service of the said writ.

Lee Boon Tatt & Ors v Takhdir Trading Sdn Bhd [1984] 2 MLJ 341 High Court, Penang (Mohamed Dzaiddin J).

P purchased two airline tickets from D, a travel agent trading under the name of 'Sterling Travel' in Rupert Street, London. P was prevented from using the tickets by the death of her husband, so she returned them and asked for a refund. D did not refund her money despite several requests. P issued a writ against 'Sterling Travel' at the firm's Rupert Street premises. Nothing was heard from them and judgment in default was entered. Steps were taken to enforce the judgment. However, it subsequently transpired that there was no such entity as 'Sterling Travel'. The travel agent was D, a limited company, trading under the name of 'Sterling Travel'. D applied to have the judgment set aside for irregularity on the ground that there was a misnomer and that the writ had not been served at their registered office, which was at Goswell Road, London. The district registrar set aside the judgment on condition that D pay the sum claimed into court. On appeal, the High Court affirmed the registrar's order and also directed that the writ be amended to properly name D. D appealed, seeking to have the default judgment set aside unconditionally.

Held, dismissing D's appeal: (1) D knew fully well that the writ was meant for them, so they could not be said to have been misled by the misnomer. It was open to the court to allow amendment of the writ even after final judgment under RSC O 20 r 5; (2) the failure to serve the writ at D's registered address was a mere procedural irregularity and did not nullify it. D had no right to have the default judgment set aside ex debito justitiae.

Singh v Atombrook Ltd [1989] 1 All ER 385 Court of Appeal, England (Kerr LJ and Sir John Megaw).

[Annotation: The provisions referred to are identical to RSC O 2 rr I, 2 and O 20 r 5 [Sing] and Companies Act (Cap 50) [Sing], s 387. The Malaysian provisions are also similar.]

The petitioner presented a petition for the winding up of the respondent on the ground that the respondent was unable to pay the judgment debt obtained by the petitioner against it. The petition was made pursuant to s 218(1)(a) of the Companies Act 1965 ('the Act') which empowers the court to wind up a company which is unable to pay its debts. The respondent submitted that the winding-up petition should not be granted as: (i) it had cross-claims against the petitioner and this should be taken into consideraton according to s 218(2)(c) of the Act; (ii) it had filed a notice of appeal on 16 March 1993 against the judgment debt and this was a bona fide dispute of the judgment debt; and (iii) the notice of demand under s 218(2)(a) of the Act was bad in law because it was delivered to the respondent's business address and not to its registered address.

Held, allowing the petition: (1) the petitioner had filed the winding-up petition under s 218(2)(a) and not under s 218(2)(c) of the Act. Following the receipt of the demand from the petitioner to pay the judgment debt, the respondent had neglected for three weeks to pay, secure or compound the demand to the reasonable satisfaction of the petitioner. There was no prima facie case of the respondent's counterclaim because it had failed to continue with the counterclaims or obtain summary judgment under O 26A r 5(1) of the Subordinate Courts Rules 1980 ('SCR') or obtain a stay of execution of the judgment debt under O 26A r 3(2) of the SCR; (2) the judgment debt was obtained under O 26A of the SCR, ie a summary judgment, on the ground that the respondent did not have a defence against the claim and there was no issue or question which was disputed which had to be tried. Therefore, the respondent did not have a bona fide dispute against the petitioner's claim; (3) the overall objective of a notice of demand is to give notice to the respondent of a winding-up petition. The demand had been made in writing, was signed and stated the amount which was due. The notice was received by the respondent and it had entered a memorandum of appearance. Therefore, no injustice had occurred here to render the notice of demand bad in law.

Cymun Development Sdn Bhd v Supermax Sdn Bhd [1995] 2 MLJ 233 High Court, Shah Alam (Faiza Tamby Chik J).

This was an application by the defendant for an extension of time to file its defence and counterclaim pursuant to O 3 r 5 of the Rules of the High Court 1980 (RHC) or alternatively, that the judgment in default of appearance entered by the plaintiff be set aside and the defendant be granted leave to enter appearance. The issues before the court are: (1) whether the judgment in default entered by the plaintiff against the defendant is irregular and therefore may be set aside under O 19 r 9 of the RHC; and (2) whether, if the judgment is regular, it may nevertheless be set aside on the ground that the defendant has a good defence on the merits. The plaintiff was at all material times an individual customer of the defendant. The plaintiff traded shares on the Kuala Lumpur Stock Exchange through the defendant, a dealer, or its servants or agents. Towards the end of 1993, the plaintiff incurred heavy losses. In the statement of claim, the plaintiff seeks to pass the losses on to the defendant based on claims in contract and negligence. The affidavit of service stated that the agent or servant of the defendant who received service of the writ was described as a 'clerk' but not named. The signature of 'Noor Mohamed' appeared on the reverse side of the writ. Noor Mohamed was in fact the manager of the administration section of the credit control division.

Held, granting the application: (1) O 62 r 4(1)(c) RHC provides that where an action lies against a corporation, the writ may be served by handing a copy of it to the secretary or director or other principal officer of the corporation. It is clear that Noor Mohamed is only one of the many managers in the defendant's corporation and cannot be described as the principal officer. In modern times, only the chief executive officer can be described as such; (2) O 62 r 9 stipulates that an affidavit of service of a document is to state by whom the document was served, the day of the week and the date of service, where and how it was served and must be in one of the forms in Form 137. In the instant case, the affidavit of service fell far short of these requirements. The writ has not been indorsed with the particulars setting out the day of the week, the date on which it was served, where and on whom it was served and the capacity in which such a person was served; (3) these irregularities are not accidental slips or omissions which may be corrected and O 2 r 1(1) cannot be called in aid thereof. The court found that the judgment in default of appearance was irregular and the defendant was entitled ex debito justitiae to have it set aside with costs; (4) after perusing the documents filed, the court found that the evidence showed the presence of triable issues warranting a full investigation at a trial.

Manuel Valentine v UMBC Securities Sdn Bhd Application No 22-453-94 High Court, Shah Alam (Faiza Tamby Chik J).

This was an application by Turris SEA Pte Ltd, a company incorporated in Singapore in October 1977, for a declaration that the issue on 20 January 1978 by the then directors of the applicant of 2,998 shares of S$10 each in the applicant to Turris Werke Gmbh was not void under s 132D(1) of the Companies Act (Cap 50, 1970 Ed). The resolution to issue these shares was passed by the directors before the company's first annual general meeting was held. The thrust of the defence was that the issue of the shares fell within the saving ambit of s 132D(8) (repealed) and, therefore, s 132D(1) did not apply to it. Section 132D was introduced into the Companies Act by the Companies (Amendment) Act (Act No 10 of 1974).

Held, refusing the application: s 132D(8) was a provision of transitional character. The object behind this saving provision was clearly to give to existing companies a last opportunity of issuing new shares without the approval of a general meeting during a limited period after the coming into operation of s 132D. It did not apply to companies incorporated after the coming into operation of the provision.

Re Shares in Turris SEA Pte Ltd [1995] 3 SLR 765; (1995) CSLR VIII[127] High Court, Singapore (Chao Hick Tin J).

Fun Ching Fwu v Yong Teck Pawnshop Pte Ltd & Anor (1996) CSLR VI[895] High Court, Singapore (Christopher Lau JC).