LNS 2020 1 1420

[2020] 1 LNS 1420 Legal Network Series
IN THE HIGH COURT OF MALAYA AT KUALA LUMPUR

(COMMERCIAL DIVISION)
[SUIT NO.: WA-22NCC-472-08/2019]
BETWEEN
GOLDEN AFFINITY DEVELOPMENT SDN BHD

(IN LIQUIDATION)
[Company No.: 934982-P] … PLAINTIFF
AND
1. LIM YOK WAH

[Identity Card No.: 470214085537]
2. LIM BOON KANG
3. SEE KOK SENG
4. LEE HAW HANN
5. ES ENG SOON HOLDINGS SDN BHD
[Company No.: 599142-P]
6. ES ENG SOON PROPERTIES SDN BHD
[Company No.: 599138-A]
7. HOE FOONG DEVELOPMENT SDN BHD
[Company No.: 958918-K]
8. LEONG TAT CHEE
9. LOH KONG MENG
[Identity Card No.: 540322105073] … DEFENDANTS
1
GROUNDS OF JUDGMENT
Introduction
[1] This is an application for discovery and inspection of

documents documented in enclosure 43 filed by the Plaintiffs
pursuant to O. 24 r. 3, 7, 11 and/or 12 of the Rules of Court 2012
(“the ROC”) against the 6 th and 7 th Defendants. At the conclusion of
the hearing, this Court dismissed the application. The following are
the Grounds of Judgment of this Court.
Background facts of the case
[2] The Plaintiff was a registered proprietor of a piece of land held

under Master Title No. Geran 54073, Lot 6, Pekan Puchong Perdana,
Daerah Petaling, Negeri Selangor Darul Ehsan (“the said Land”).
[3] The said Land was developed by the Plaintiff into a

development project known as “i-32 Corporate Industrial Park”
comprising of 32 units of three-storey semidetached industrial
factories (“the Project”). The Plaintiff completed the Project and
delivered vacant possession of all 32 units before it had been wound
up on 30.10.2017.
[4] On 19.7.2018, the court appointed Mr. Tan Wai Leng from
Cheng & Co. Corporate Recovery Sdn. Bhd. as the private liquidator
of the Plaintiff (“the Liquidator”).
[5] The position of the Defendants is explained below:
2
Defendants Status/Position
1 st Defendant i. Former director of t he Plaint iff. Appointed

on 7.7.2011 and resigned on 16.1.2017;
ii. Director and shareholder of the 5 t h
Defendant; and
iii. Director of t he 6 t h Defendant
2 n d Defendant i. Former director of t he Plaint iff. Appointed

ii. Director and shareholder of the 5 t h
Defendant; and
iii. Director of t he 6 t h Defendant
3 r d Defendant i. Former director of t he Plaint iff. Appointed

ii. Exist ing shareholder of t he Plaint iff; and
iii. Director and shareholder of the 7 t h Defendant
4 t h Defendant i. Former director of t he Plaint iff. Appointed

on 7.7.2011 and resigned on 16.1.2017; and
ii. Exist ing shareholder of t he Plaint iff.
5 t h Defendant Exist ing shareholder of t he Plaint iff.
6 t h Defendant Subsidiary of t he 5 t h Defendant
7 t h Defendant The 3 r d Defendant is t he director of t he 7 t h

Defendant
8 t h Defendant Current director of t he Plaint iff appointed on

13.7.2017
9 t h Defendant Current director of t he Plaint iff appointed on

13.7.2017
3
[6] This Suit is premised on an allegation of unlawful declaration

of dividend of the Plaintiff in the sum of RM 27, 000, 000. 00 by the
1 st , 2 nd , 3 rd and 4 th Defendants.
[7] It is the Plaintiff’s case that subsequent to the winding up, the
Liquidator received proof of debts (“the POD”) from a group of
creditors who are the purchasers who had bought the said factories,
premised upon their claim for compensation for Liquidated and
Ascertained Damages (“LAD”) amounting to RM 6, 443, 802. 41
pursuant to late delivery of vacant possession by the Plaintiff.
[8] Forensic Account Review Report dated 12.7.2019 prepared by

Cheng & Co. Global Advisory Sdn. Bhd. shows that as early as
30.10.2015 the former directors of the Plaintiff were in receipt and
fully aware of Letter of Demand from the purchasers.
[9] Nonetheless, in less than 12 months from the date of the

winding up, by virtue of Directors’ and Members’ Resolution on
Dividend Distribution dated 7.12.2016, the former directors of the
Plaintiff declared dividends in the sum of RM 27, 000, 000. 00 to
themselves without paying any LAD.
[10] The dividend was distributed partially in kind with the

remaining unsold six (6) units of the factories and partially in cash.
The six (6) unsold units are:
i. HS(D)296626, No. PT 5918, Pekan Puchong Perdana,

Daerah Petaling, Negeri Selangor Darul Ehsan (“Property
1”);
ii. HS(D)296627, No. PT 5919, Pekan Puchong Perdana,

2”);
4
iii. HS(D)296629, No. PT 5921, Pekan Puchong Perdana,

3”);
iv. HS(D)296630, No. PT 5922, Pekan Puchong Perdana,

4”);
v. HS(D)296644, No. PT 5936, Pekan Puchong Perdana,

5”); and
vi. HS(D)296645, No. PT 5937, Pekan Puchong Perdana,

6”).
[11] The distribution of dividend is as follows:

Recipient Entitlement of Unit of Factories Cash
dividend
5th RM18,360,000.00 4 unit s (“Property 1 RM700,400.00
Defendant to Property 4”) wit h
considerat ion of
RM17,659,600.00
3r d RM5,400,000.00 2 unit s (“Property 5 RM200,000.00

Defendant and Property 6”)
wit h considerat ion of
RM5,200,000.00
4th - RM3,200,000.0
Defendant 0
[12] The 5 th Defendant nominated their subsidiary, the 6 th Defendant

to receive the said property by entering into a sale and purchase
5
agreement (“SPA”) with the Plaintiff and the purchase consideration

of RM 17, 659, 000. 00 was settled, contra with the declared dividend
payable to the 5 th Defendant.
[13] The 3 rd Defendant nominated its own company, the 7 th

Defendant to receive the said property by entering into a SPA with
the Plaintiff and the purchase consideration of RM 5, 628, 600. 00
was settled, contra with the declared dividend payable to the 3 rd
Defendant.
[14] The Plaintiff subsequently filed enclosure 43 for discovery and

inspection of the documents as reproduced below:
i. Perjanjian Jual Beli yang ditandatangani oleh Defendan

Ke-6 dan Plaintif dan/atau Perjanjian Lain, Dokumen,
Surat-menyurat yang berkaitan bagi Hartanah -hartanah
yang berikut:-
(a) HS(D)296626, No. PT 5918, Pekan Puchong

Perdana, Daerah Petaling, Negeri Selangor Darul
Ehsan (“Hartanah 1”);
(b) HS(D)296627, No. PT 5919, Pekan Puchong

(c) HS(D)296629, No. PT 5921, Pekan Puchong

Ehsan (“Hartanah 3”); dan
(d) HS(D)296630, No. PT 5922, Pekan Puchong

6
ii. Perjanjian Jual Beli yang ditandatangani oleh Defendan

Ke-7 dan Plaintif dan/atau Perjanjian Lain, Dokumen,
Surat-menyurat yang berkaitan bagi Hartanah -hartanah
yang berikut:-
(a) HS(D)296644, No. PT 5936, Pekan Puchong

Ehsan (“Hartanah 5”); dan
(b) HS(D)296645, No. PT 5937, Pekan Puchong

Ehsan (“Hartanah 6”)
iii. Perjanjian sewa dan/atau Perjanjian Lain, Dokumen,

Surat-menyurat yang berkaitan bagi Hartanah 1-6 yang
tersebut di atas yang ditandatangani oleh Defendan Ke -6
dan/atau Ke-7 dengan sesiapapun;
iv. Apa-apa Perjanjian (sekiranya ada), surat janji,

Dokumen, Surat- menyurat yang berkaitan kegunaan bagi
Hartanah 1-6 yang tersebut di atas.
[15] After hearing all parties, this Court dismissed enclosure 43 with
costs in the cause.
Parties’ contentions
[16] The Plaintiff submitted that it is an undisputed fact that the

SPA’s are in the possession of the Defendants. Moreover, the SPA’s
are relevant to the Plaintiff’s case as the Plaintiff is seeking the
remedy of the return of the said Property 1 to 6 from the Defendants.
With regards to the tenancy agreements, the Plaintiff contended that
since the relevant Defendants failed to rebut the Plaintiff’s averments
7
that Property 1 to 6 have been rented out to third parties, the Court
shall presume there are in existence the tenancy agreements.
[17] In essence, in resisting enclosure 43, the 6 th and 7 th Defendants

submitted that the application is nothing more than a fishing
expedition by the Plaintiffs to justify its claim. Further, the 6 th and
7 th Defendants submitted that the Plaintiff failed to satisfy this Court
that the production of the documents are necessary for fair disposal
of the suit.
[18] Arguments proffered by both the Plaintiff and the Defendants

will be dealt with in full herein below.
The law
[19] The Plaintiff’s application is made pursuant to the following

rules under O. 24 of the ROC:
a) Rule 3 which relates to the power of the court to order for

discovery;
b) Rule 7 which relates to the power of the court to order for

discovery of particular documents;
c) Rule 11 which relates to power of the court to order for

production of the documents for inspection; and
d) Rule 12 which relates to power of the court to order for

production of the documents to the court.
[20] O. 24 rr. 3 and 7 is to be read in the light of r. 8 of the same

Order, which states:
Discovery to be ordered only if necessary (O. 24 r. 8)
8
8. On the hearing of an application for an order under rule

3, 7 or 7A, the Court, if satisfied that discovery is not
necessary, or not necessary at that stage of the cause or matter,
may dismiss or adjourn the application and shall in any case
refuse to make such an order if and so far as it is of the opinion
that discovery is not necessary either for disposing fairly of the
cause or matter or for saving costs. “
[21] Likewise, O. 24 r. 12 is to be read in the light of rule 13 (1) of

the same Order, which states:
Production to be ordered only if necessary (O. 24, r. 13)
13. (1) An order for the production of any documents for

inspection or to the Court shall not be made under any of the
foregoing rules unless the Court is of the opinion that the order
is necessary either for disposing fairly of the cause or matter or
for saving costs.
[22] On the same issue, the general legal principle on the

requirements to be fulfilled in a discovery application as laid down
by the Supreme Court in the case of Yekambaran Marimuthu v.
Malayawata Steel Bhd [1994] 2 CLJ 581 are as follows:
i. there must be a ‘document’;
ii. the document must be ‘relevant’; and
iii. the document must be or have been in the ‘possession,

custody or power’ of the person against whom the order
for discovery is sought; and
iv. the documents are limited to documents which are

relevant to or relate to the factual issues in dispute.
9
Analysis
Whether the documents were necessary
The SPA
[23] It is the Plaintiff’s case that the declared dividend of RM 27,

000, 000.00 was wrongly distributed to the 3 rd , 4 th and 5 th
Defendants. It was the Liquidator’s case that that the dividend was
distributed partly by cash and partly in kind.
[24] The dividend allegedly distributed in kind was in relation to

Property 1 to Property 6 from the Project. It was the 6 (six) unsold
units that was then purchased by the 6 th and 7 th Defendants. The
payment was by way of contra with the dividend payments.
[25] The key test to be applied in a discovery application is the test

of necessity as expounded in Nguang Chan aka Nguang Chan Liquor
Trader & Ors v. Hai-O Enterprise Berhad & Ors [2009] 5 MLJ 40 in
which Tengku Baharuddin Shah JCA held as follows:
“As stated earlier the real issue is compliance with r. 13(1)

which stipulates that discovery may only be ordered if the court
is of opinion that such order is necessary either for disposing
fairly of the cause or matter or for saving costs. The test is
necessity not fairness and it is for the applicant to satisfy the
court, see Dolling-Baker’s case and Ventouris v. Mountain.
Because of that erroneous premise the learned judge appears to
be more concerned with relevance and fairness and omitted to
consider whether and why it was necessary for the order to be
made. The respondents also failed to provide any materials to
satisfy the court of such necessity.
10
If necessity is not the prime concern of the court, allowing

discovery would tantamount to allowing the respondents to fish
for evidence which defeats the propose of the rule by causing
the appellants to suffer unfair disadvantage if they fail to
comply with an order which is oppressive and incapable of
compliance.”
[26] Similarly, the court in Goo Saw Jin v. Hwang Sze Yunn & Anor
[2018] MLJU 367 in applying the principle of necessity held as
follows:
“[42] On the issue of necessity, I have taken the liberty of

referring to the case of Bqyerische Hypo-und Vereinsbank AG
v. Asia Pacific Breweries (Singapore) Pte Ltd and other
applications [2004] SGHC 155 where the High Court of
Singapore at paragraph 37 stated as follows:
“The ultimate test is whether discovery is necessary for

disposing fairly of the proceedings or for saving costs. An
assertion that the documents are relevant will not be good
enough. Equally, an assertion that the documents are
necessary because they are relevant will not be enough. ”
[Emphasis added]
[27] Given that the purchase of the properties was never disputed by
the Defendants, it is therefore unnecessary for the SPA to be
produced by the 6 th and 7 th Defendants. It is the view of this Court
that the said SPA would not serve any purpose either to the Plaintiff
or the Defendants as the sale and purchase of the properties are not in
dispute. There is no necessity to order the discovery of the SPA.
11
Fishing exercise
[28] Despite being aware that there is no dispute that there was a
payment in kind by way of the sale and purchase of the properties,
the Plaintiff continues to insist that they be furnished with the
documents. The insistence of the Plaintiff borders into a fishing
exercise.
[29] This Court agrees with the Defendants that the Plaintiff should
have possession of all documents prior to filing the suit. This is
primarily due to the Plaintiff having commissioned a Forensic
Accountant to prepare a Forensic Accounting Review Report dated
12.7.2019 on the Plaintiff’s affairs (“the Forensic Report”).
[30] The Forensic Accountant also made findings of breaches of law

on the declaration of dividend against the Defendants in the said
Forensic Report. It was this report that the Liquidator based his claim
upon. Clearly, the Liquidator must have access to the said
documents. To contend otherwise would only mean that the Plaintiff
is making an unsubstantiated claim.
[31] Having embarked on such an extensive exercise and arriving at

a conclusive finding as claimed in the Forensic Report, the Plaintiff
cannot now look to the Defendants to improve its case. This clearly
is a fishing exercise calculated to bolster the Plaintiff. The
Defendants have equal right to deny access to the documents.
[32] Also, it is insufficient for the Plaintiff to allege without more

that the SPA’s are within the possession of the 6 th and 7 th
Defendants.
12
Tenancy Agreements
[33] The need for the tenancy agreements flows from the Plaintiff’s
allegation that the properties have been rented out. It is the
Plaintiff’s claim that they are entitled to recover whatever rental that
has been collected by the 6 th and 7 th Defendants.
[34] The Liquidator’s claim of having “no choice but to deem that
the said property 1-6 had been rented out to 3 rd parties to generate
income and/or to be utilised by the relevant Defendants for their own
use” is another example of the Plaintiff’s attempt to bolster its claim.
It is a pure fishing exercise.
[35] Instead of having in its possession documentary evidence to

prove the market rental of those properties, the Liquidator is again,
looking to the 6 th and the 7 th Defendants to provide him with rental
information to support the Plaintiff’s contention that the properties
were rented out and yielding rental income. Again, the Defendants
have every right to challenge the Plaintiff for access to any tenancy
documents.
[36] It is also the finding of this Court that the Liquidator has failed
to establish expressly the belief that the 6 th and 7 th Defendant have,
or at some point in time had in their possession, custody or power of
the documents as required under the ROC. This is a failure to comply
with O. 24 rule 7 (3) and rule 11 (3) of the ROC.
[37] During the course of oral submissions, counsel for the Plaintiff
submitted that the Liquidator was handicapped by virtue of him not
being able to have access to the documents. It is to be reiterated that
the test for discovery is whether the documents are necessary. It is
not in any manner to aid one party due to difficulties in obtaining
documents.
13
[38] In the final analysis, this Court adopts the observations in Goo
Saw Jin where Nantha Balan J (as he then was) remarked as follows:
“that in applying the relevant legal principles to the facts of

the present case, it may be accurate to state that when the
plaintiff’s discovery application is viewed through the “lens of
necessity”, it is clear that the plaintiff has completely failed to
address the requirement of necessity. The plaintiff has merely
asserted that the documents are purportedly relevant without
demonstrating in what way they are relevant. ”
[Emphasis added]
[39] As the Liquidator alleged causes of action are involves on

Section 132, Section 530 and Section 540 of the Companies Act 2016
against the Defendants, it behoves this Court to consider the exercise
of discretion based on the pleaded causes of action. This Court is not
convinced that the documents which are sought in the Plaintiff’s
discovery application are relevant or necessary for the determination
of a fact in issue and generally for the expeditious disposal of the
suit.
Conclusion
[40] In the foregoing, the Plaintiff’s application in enclosure 43 is

dismissed with costs.
(AHMAD FAIRUZ ZAINOL ABIDIN)

Judge
High Court of Malaya
Kuala Lumpur
Dated: 17 JULY 2020
14
Counsels
For the plaintiff - James Ee Kah Fuk; M/s KF Ee & Co
For the defendants - Leong Kwong Wah; M/s Leong Kwong Wah
Legislation referred to:
Companies Act 2016, ss. 132, 530, 540
Rules of Court 2012, O. 24 rr. 3, 7(3), 11(3), 12
15

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[2020] 1 LNS 1420 Legal Network Series

IN THE HIGH COURT OF MALAYA AT KUALA LUMPUR

GOLDEN AFFINITY DEVELOPMENT SDN BHD

1. LIM YOK WAH

[1] This is an application for discovery and inspection of

Background facts of the case

[2] The Plaintiff was a registered proprietor of a piece of land held

[3] The said Land was developed by the Plaintiff into a

[5] The position of the Defendants is explained below:

1 st Defendant i. Former director of t he Plaint iff. Appointed

2 n d Defendant i. Former director of t he Plaint iff. Appointed

3 r d Defendant i. Former director of t he Plaint iff. Appointed

4 t h Defendant i. Former director of t he Plaint iff. Appointed

5 t h Defendant Exist ing shareholder of t he Plaint iff.

6 t h Defendant Subsidiary of t he 5 t h Defendant

7 t h Defendant The 3 r d Defendant is t he director of t he 7 t h

8 t h Defendant Current director of t he Plaint iff appointed on

9 t h Defendant Current director of t he Plaint iff appointed on

[6] This Suit is premised on an allegation of unlawful declaration

[8] Forensic Account Review Report dated 12.7.2019 prepared by

[9] Nonetheless, in less than 12 months from the date of the

[10] The dividend was distributed partially in kind with the

i. HS(D)296626, No. PT 5918, Pekan Puchong Perdana,

ii. HS(D)296627, No. PT 5919, Pekan Puchong Perdana,

iii. HS(D)296629, No. PT 5921, Pekan Puchong Perdana,

iv. HS(D)296630, No. PT 5922, Pekan Puchong Perdana,

v. HS(D)296644, No. PT 5936, Pekan Puchong Perdana,

vi. HS(D)296645, No. PT 5937, Pekan Puchong Perdana,

[11] The distribution of dividend is as follows:

3r d RM5,400,000.00 2 unit s (“Property 5 RM200,000.00

[12] The 5 th Defendant nominated their subsidiary, the 6 th Defendant

agreement (“SPA”) with the Plaintiff and the purchase consideration

[13] The 3 rd Defendant nominated its own company, the 7 th

[14] The Plaintiff subsequently filed enclosure 43 for discovery and

i. Perjanjian Jual Beli yang ditandatangani oleh Defendan

(a) HS(D)296626, No. PT 5918, Pekan Puchong

(b) HS(D)296627, No. PT 5919, Pekan Puchong

(c) HS(D)296629, No. PT 5921, Pekan Puchong

(d) HS(D)296630, No. PT 5922, Pekan Puchong

ii. Perjanjian Jual Beli yang ditandatangani oleh Defendan

(a) HS(D)296644, No. PT 5936, Pekan Puchong

(b) HS(D)296645, No. PT 5937, Pekan Puchong

iii. Perjanjian sewa dan/atau Perjanjian Lain, Dokumen,

iv. Apa-apa Perjanjian (sekiranya ada), surat janji,

[16] The Plaintiff submitted that it is an undisputed fact that the

[17] In essence, in resisting enclosure 43, the 6 th and 7 th Defendants

[18] Arguments proffered by both the Plaintiff and the Defendants

[19] The Plaintiff’s application is made pursuant to the following

a) Rule 3 which relates to the power of the court to order for

b) Rule 7 which relates to the power of the court to order for

c) Rule 11 which relates to power of the court to order for

d) Rule 12 which relates to power of the court to order for

[20] O. 24 rr. 3 and 7 is to be read in the light of r. 8 of the same

Discovery to be ordered only if necessary (O. 24 r. 8)

8. On the hearing of an application for an order under rule

[21] Likewise, O. 24 r. 12 is to be read in the light of rule 13 (1) of

Production to be ordered only if necessary (O. 24, r. 13)

13. (1) An order for the production of any documents for

[22] On the same issue, the general legal principle on the

i. there must be a ‘document’;

ii. the document must be ‘relevant’; and

iii. the document must be or have been in the ‘possession,